If you`re familiar with the construction industry, you`ve probably heard of a management contract. But what exactly is it, and how does it work in building construction? Let`s take a closer look.
A management contract is a type of agreement between a construction owner or developer and a construction management firm. The agreement outlines the scope of work, responsibilities, and project schedule, among other details. In essence, the management firm acts as an extension of the owner`s team, overseeing the day-to-day operations of the project.
The main benefit of a management contract is that it allows the owner to delegate the management of the construction project to a professional with extensive experience in the field. This way, the owner can focus on other aspects of the project (such as financing, marketing, and design) while the management firm handles the construction process.
Another advantage of a management contract is that it provides the owner with more control and transparency over the project. The management firm is required to provide regular reports and updates on the progress of the project, so the owner can make informed decisions and address any issues that may arise.
On the other hand, a management contract requires the owner to pay a fee to the management firm for their services. This fee is typically a percentage of the overall construction cost, which can add up quickly. However, many owners see the value in hiring a professional management firm and are willing to pay the additional cost.
So, what specific tasks does a management firm typically handle in a construction project? Here are some examples:
– Developing a project plan and timeline
– Procuring materials and equipment
– Hiring and managing subcontractors
– Ensuring compliance with building codes and regulations
– Managing construction budgets and schedules
– Providing regular reports and updates to the owner
– Handling any issues or disputes that arise during the construction process
Overall, a management contract can be a valuable tool for construction owners and developers who want to ensure their project runs smoothly and efficiently. However, it`s important to carefully vet and select a reputable management firm to ensure the best possible outcome. With the right team in place, a management contract can lead to a successful and profitable construction project.