Construction Management near you

Under a lump sum contract the builder takes the risk on price, holds every subcontract, and carries the coordination and the defect responsibility. You get one number and one party to hold to it, and you pay for that certainty through the margin priced into the number.

Under construction management the owner sees each trade tender, pays the actual cost of the work, and pays the construction manager a fee for tendering, awarding, programming and coordinating. Cost certainty arrives progressively rather than at the start, because packages are priced as the design for each is finalised. That suits a project where the design is still developing or where the owner wants genuine control over trade selection.

The trade-off is exposure. Price risk sits with the owner, so an overrun in one package is an overrun in the budget rather than in the builder's margin. And because the trade contracts are the owner's, the statutory payment regime applies between each trade and the owner, not between each trade and a head contractor standing in between.

Building Commission NSW describes the effect of the Building and Construction Industry Security of Payment Act 1999 plainly: all contractors doing construction work, or providing goods or services under a construction contract, have the right to receive progress payments for work delivered. That right exists whether a contract is verbal, written or absent, and even where a contract states the contractor cannot claim progress payments. Unless the contract says otherwise, claims may be made once a month, valued according to the contract terms or the value of work performed.

The change that matters to owners came into effect on 1 March 2021, when the Act was extended to owner occupier construction contracts, which are generally residential building work where the person who engages the builder lives or proposes to live in the premises. Contracts signed before that date continue under the previous rules. Where an owner occupier contract does not expressly say when progress payments become due and payable, payment should be made 10 business days after the payment claim was made.

There are limits. The FAQ published with the legislation notes that the Act does not apply where you contract directly with a homeowner for residential building work where the total cost of labour and materials is less than 5,000 dollars, or for electrical wiring work, plumbing, draining and gas fitting work, or air conditioning and refrigeration work. Every other state and territory has its own security of payment legislation, so confirm the position where the work is being done.

The point of construction management is visibility, so a manager who cannot show you the tenders, the awards and the running cost position is not delivering what the model exists to deliver. Ask at the outset what the cost report will look like, how often it will be issued, and whether it distinguishes between committed cost, claimed cost, paid cost and forecast final cost. Those are four different numbers and conflating them is how a project drifts without anyone noticing.

Settle the fee basis before the first tender. A fee that is a percentage of cost rises as the project rises, which is worth naming out loud even where nobody intends anything by it; a fixed fee removes that, but has to be reset if the scope changes materially. Either can work. What does not work is leaving it unstated.

Be equally clear about what the fee includes. Tendering, awarding, programming, coordination, progress claim assessment, defect management and handover documentation are all separate activities, and a fee quoted for coordination alone may leave the administrative work, including the statutory payment responses, sitting with you.

Without a head contractor, defect responsibility is distributed across the trade contracts, which means each one needs to carry its own defect liability period, its own warranty terms and, where appropriate, its own retention or security. Agreeing that at tender stage costs nothing. Trying to agree it after a defect appears is close to impossible.

Retention is worth particular thought, because it is the only practical leverage available once a trade has left site. Decide before awarding whether retention will be held, at what level, when it will be released, and who holds it. Build the same discipline into handover: each package should deliver its own certificates, warranties and as-built information, collected as it finishes rather than chased months later.

Licensing, prescribed contract terms and residential building insurance requirements sit alongside all of this and are set state by state, with their own thresholds and their own definitions of who must hold what. Confirm what a construction management arrangement means for those protections in your own state before the first package is awarded, because the model changes who the contracting parties are and therefore which protections attach.