Our latest Construction Management (CM) blog centres on removing the Main Contractor’s markup. Or alternatively, eliminating the Main Contractor’s slice of the pie.
Eliminating the Main Contractor’s Slice of the Pie via Construction Management
In most procurement methods, the Main Contractor uplifts all work package costs. This markup can inflate the total project cost by 5% to 15%. By adopting CM the Customer can bypass and delete this markup. Under CM the Construction Manager acts as an agent for the Customer to manage the work packages. Direct Customer appointment of Trade Contractors can lead to a more competitive bidding environment and a lower cost.
CM offers a transparent process, giving Customers a clear view of actual cost not a Main Contractor’s price. The Construction Manager is a fee-based service provider not a profit-earning contractor. All project costs are open-book, giving Customers full visibility of their expenditure. This transparency helps Customers make informed decisions without hidden costs or markups.
Customers gain more control over the project, with the flexibility to make changes without the limitation of a fixed contract sum. Variations in design, materials and scope do not incur Main Contractor markups.
Without the pressure of Main Contractor profit margins, there is more opportunity to focus on quality and performance. This in turn releases the quality advantaged of CM, as covered in our previous Blog. The Construction Manager’s QA ensures compliance with the Customer’s specifications and standards.
Procurement through CM provides a cost-effective, transparent, and controlled way of delivering projects. Customers enjoy direct economic benefits while maintaining high standards of quality and efficiency.
As well as profit, the Main Contractor’s markup also includes for risk – on top of the Sub-Contractor’s allowance. So Customers pay twice for risk, without any control over it.
Under CM, risk is bought once from the Trade Contractor. Then a central risk allowance is managed with the Customer, like any other project.
The above cost savings achieved through CM allows viability on otherwise unaffordable projects.
Summary
Significant benefits are available by eliminating the Main Contractor’s slice of the pie via Construction Management, including:
Using our Main Contractor experience, Scribe can provide project delivery whilst eliminating markups.
Contact us to see how Scribe can apply the cost benefits of CM to your project. Please comment below and read our other Blogs.
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