WHAT IS CONSTRUCTION MANAGEMENT?
Construction Management in its true definition is an arrangement where the Builder or ‘Construction Manager’ is engaged to manage the construction process on the client’s behalf. The Construction Manager charges a management fee, whilst the construction costs are paid by the client. Construction costs do not attract a margin, which allows the client to build at cost.
The management fee is a fixed amount, agreed upon prior to commencement and remitted on a monthly basis.
WHAT ARE THE KEY DIFFERENCES COMPARED TO A FIXED PRICE CONTRACT?
A Construction Management arrangement is a totally transparent form of construction. It ensures that a building is constructed for what it actually costs.
A Fixed Price Contract commits a client into a contract amount which is highly unlikely to be the final construction cost. It is common practice for a fixed price builder to quote only what is on the drawings, often with the knowledge and assumption that any ambiguous or nonexistent details will be covered by future variations. Once a client is tied into a contract, they will have less control over the variation costs and consequently little control over the ultimate and final cost of construction.
WHAT IS A P.C. OR A P.S?
Prime Cost (P.C.) and Provisional Sums (P.S.) are used in Fixed Price arrangements and are cost allowances which are allocated to areas of work that are unspecified or difficult to quantify prior to construction commencing. P.C. and P.S. are not necessary in a Construction Management arrangement as the client isn’t required to commit to any cost allocations until the appropriate stage of construction.
P.C. and P.S. do not guarantee cost control, they are merely cost allocations that do not necessarily represent an upper limit.
WHAT ARE THE ADVANTAGES OF A CONSTRUCTION MANAGEMENT ARRANGEMENT?
It is in the Construction Manager’s interest to complete the contract in the agreed number of months or earlier as he/she is committed to a fixed management fee.
It is also important that the Construction Manager maintains client satisfaction. His/her future projects rely heavily on the previous client’s recommendation, especially in the high end residential market.
UNDER WHAT CIRCUMSTANCES WOULD THE FIXED CONSTRUCTION MANAGEMENT FEE INCREASE?
This occurrence is quite rare. It would only transpire if changes to the scope of works actually affected the completion date in a significant way.
WHAT ARE THE CONSTRUCTION MANAGER’S DUTIES?
– Review of construction details for’ buildability’ and cost effectiveness.
– Submission of alternative details and / or materials to reduce costs.
– Sourcing of suitable trade suppliers and contractors.
– Gathering of multiple quotations for each trade component.
– Administration of trade components.
– Scheduling of trade components.
– Organisation and overseeing of construction process.
– Monitoring construction costs against Quantity Surveyor reports.
– Ongoing quality control.
– Approval of trade invoices and compilation of monthly reports for direct payment by client.
– Post handover availability for construction related matters.
WHAT ELSE IS PROVIDED FOR THE CONSTRUCTION MANAGEMENT FEE?
– Contract Administrator
– Data entry clerk
– Book keeper
– An extensive network of quality, reliable tradesman that have been accumulated over a seventeen year period.
– A tried and proven office infrastructure that deals exclusively in the business of Construction Management.
– A personal, thorough approach that can only be delivered by a family company.
HOW DOES THE CLIENT KNOW WHAT TO PAY THE SUB-CONTRACTORS?
All invoices are individually assessed for progress against their respective contract amounts. The invoices are compiled in a monthly report according to their cost centre. The client remits one payment for the entire report. Marino Construction Management remits to the individual contractors and suppliers. Payments commence at the end of the first month of construction. All claims are submitted in the middle of the month and are payable in 14 days.
WHAT MEASURES DO YOU HAVE IN PLACE FOR SUB CONTRACTS?
All contracts are let with a Sub-Contract Agreement detailing the following;
– Scope of Works
– OHS requirements
– Drawing register
– Schedule requirement(s)
– Contract Value
– Claim Schedule
– Payment Terms
Contractors are not fully paid until final approval of works by our project team and the client.
WHAT INSURANCE IS IN PLACE?
a. Work Cover
Built into Contractors Rates
b. Contract Works and Third Party Legal Liability
Marino Construction Management Pty Ltd has a current policy in place. The insurance company will need to be advised of the value and type of project and will issue a premium specifically for the project. This amount will be payable by the client. Public Liability Cover is within this policy and is to the level of ten million dollars.
c. Warranty Insurance
Marino Construction Management Pty Ltd has a certificate of eligibility for warranty insurance.