In October 2017, the International Bar Association held its annual conference in Sydney. I was tasked, along with Jaime Gray from Navarro Sologuren, Paredes & Gray in Lima, Peru, with chairing the first session of the International Construction Projects Committee, on Construction Management – A Path to a Good Outcome or a Sure Way to Blow the Budget?
The task of the session was to examine the risks and benefits of adopting construction management as a procurement model for major projects. The panel comprised internationally recognised construction lawyers and advisers Peter Scott Caldwell (from Hong Kong), Eduardo Koch (from Nicholson y Cano, in Argentina), Randy Hafer (from Kilpatrick Townsend in Atlanta, Georgia, USA), Yasemin Cetinel (from Cetinel Law, in Istanbul, Turkey and Rome, Italy) and Bill Barton (from Barton Legal in Leeds, UK).
The consensus of the discussion was that, while direct contracting using a construction management model may have advantages, they are not for the faint hearted. Managing the various interfaces between the construction manager, the designers, main contractor and specialist suppliers and subcontractors can get messy, and the ability to lay off liability between each project participant is limited.
In order to capture the benefits potentially on offer through construction management, the owner needs to be very disciplined in the core requirements for all successful projects:
- engaging the right resources at appropriate times;
- investing time in defining the scope of the project and each appointment before it is made;
- using risk registers and proactive project management techniques to identify project risks at a time when they can properly be avoided or at least mitigated;
- properly establishing a reasonable project cost and monitoring progress of costs against budget at a time and in a manner which enables blow-outs to be avoided; and
- including a disputes avoidance regime which maintains a collaborative relationship throughout the project team.
The conclusion was that any procurement method alone is insufficient to achieve this.