This is our final Blog on the benefits of procurement via Construction Management (CM). It examines on the advantage of a single point of contact with no single point of failure for a project.

Construction Management: Single Point of Contact with No Single Point of Failure

Construction projects can be complex and involves contractors, designers, third parties and stakeholders. Customers usually contract with a single party to coordinate and manage project operations on their behalf. This allows the Customer to focus on their core activities and drive the agenda forward.

A single entity responsible for coordination of all construction activities provides project accountability. This leads to improved performance and transparency in delivery management. There is clear definition on responsibilities for design, operational and commercial elements.

A single point of contact promotes smoother communication between all project parties. This leads to faster decision-making and problem-solving, with no navigation through communication channels. Collaborating with a single contact fosters innovative solutions and enhances project quality. Simple lines of communication allow increased flexibility for making changes to the project.

However, appointing a Main Contractor as the single point of contact via Traditional or Design & Build procurement introduces a single point of failure. Should the Main Contractor become insolvent, project progress halts, and completion jeopardised. This is regardless of any performance bonds of guarantees in place.

In March 2024, construction firms accounted for 17.4% of all insolvencies in England and Wales, with 310 registered construction businesses becoming insolvent. Construction was the biggest contributor to insolvencies across the UK economy in 2022, accounting for 18.8%. And there was a significant increase in insolvencies in construction from 2021 to 2022, up 59.4%.

Notable administrations and liquidations in recent years show the fragility of household Main Contractors:

• Buckingham Group: with a turnover of £665m, Buckingham was the largest contractor to have collapsed since Carillion in 2018.
• Henry Construction: despite trading £400m in the previous year, Henry’ s only permanently employed 48 people when it failed
• Tolent: a £200m revenue company who collapsed due to major losses on a scheme in Durham and tightening credit conditions.
• NMCN: a contractor with a turnover of £400 million, was forced into administration in October 2021.

Summary

CM provide the Customer with the best of both worlds for delivery and risk as below:

• Customer provided with a single point of contact
• Construction Manager acts as an agent and coordinates activities and parties
• Customer is in direct contract with Trade Contractors
• Failure and insolvency risk is spread
• No single point of failure

Construction Management provides: single point of contact with no single point of failure.

Contact Scribe to further discuss the benefits of CM. Please leave a comment below and check out our other Blogs.

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