Our latest Blog reviews the cost transparency benefits of Construction Management (CM) procurement.
Cost Transparency via Construction Management
The open-book nature of CM is a distinct advantage over Traditional and Design & Build. CM allows the Customer to see a detailed breakdown of all project cost committed or expended.
Through the Construction Manager the Customer can audit every penny spent. This is unlike other procurement routes where a Main Contractor’s lump sum may cover various items.
CM provides true cost awareness and understanding to the Customer. With no party masking the true trade cost, the Customer has better financial control.
The Construction Manager supports throughout the design and cost planning project stages. So the Customer can influence decisions that affect the final cost with confidence. With Traditional or single stage Design & Build, costs are often fixed before the design is complete. Then when the design does change, the cost to the Customer is the Main Contractor’s price – which may be very different to the true cost.
Under CM, each work package can be competitively tendered. This means that the Customer only pays the market rate with no Main Contractor markup or masking of cost. There is a much-reduced risk of overpayment with Customers able to verify actual cost.
Customers can engage direct with the Trade Contractors for value engineering. True savings are transparent, not diluted by a Main Contractor creaming off the top.
CM also provides much improved Customer cashflow management. Certified payments are for actual progress and cost incurred, not pre-agreed lump sums. Via interim payments Main Contractors can often triple their forecast margin temporarily through overmeasure. They stretch out supply chain contract terms, preventing payments flowing downstream. With CM, Customer payments go direct to the Trade Contractors.
Cost transparency via CM leads to better stakeholder engagement and trust. All relevant parties can see the true financial aspects on the project down to trade level. Customers can better plan and forecast future projects knowing the true costs.
CM offers Customers a high level of true cost transparency. This leads to better cost control, increased savings, and collaborative project management. It benefits Customers who want close involvement in financial decisions on their projects.
Summary
The cost transparency benefits of Construction Management include:
Contact Scribe to apply the cost transparency benefits of Construction Management. Please comment below, and read our other Blogs.
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