Embarking on a construction project involves critical decision-making, with the choice of the right contract playing a pivotal role.
This article explores various construction contracts in the school, aged care and commercial sectors, shedding light on their benefits and risks for both the client and the head contractor. Take a closer look at this comprehensive table:
Contract Type | Early Contractor Involvement (ECI) | Construct Only (Lump Sum) | Design and Construct | Managing Contractor | Alliance |
Overview | Engages building contractor early in project. | Traditional fixed price, lump-sum contract. | Contractor responsible for design and construction. | Manages project and subcontractors. | Collaborative alliance contract. |
Benefits to Client | Early expertise, risk mitigation. | Fixed price, defined scope. | Streamlined process, cost certainty. | Single point of contact, cost efficiency. | Shared goals, innovation. |
Benefit to Head Contractor | Involvement in early stages ensures buildability | Single point of contact, potential cost savings through competitive subcontractor bids. | Clear budget with minimal variations. | Early cost commitment, potential profit from design and construction. | Shared risks and rewards, potential for innovation. |
Risks to Client | Potential design changes and uncertainties. | Dependency on managing subcontractors, potential delays. | Limited flexibility for design changes during construction. | Design errors and changes during construction. | Reliance on effective communication and collaboration. |
Risk to Head Contractor | Design uncertainty, resource allocation. | Design changes, cost overruns. | Design accountability, scope changes. | Subcontractor risks, time constraints. | Profit sharing, complex collaboration. |
Level of Design Input Required
| High collaboration and design input. | Complete design provided before construction. | High involvement in the design process. | Collaborative approach in design and construction. | Continuous collaboration throughout the project. |
Define Project Goals: Clearly articulate the project's objectives, including budget constraints, timeline expectations, and desired outcomes. Understanding the project's unique goals will help select a contract that aligns with these objectives.
Evaluate Project Complexity: Assess the complexity, size, scope, and technical requirements. Complex projects may benefit from contracts, allowing flexibility and collaboration in the design and construction phases.
Identify Risks: Evaluate potential risks associated with the project, such as design uncertainties, changes in scope, and unforeseen site conditions. Understanding and identifying risks early on will help choose a contract appropriately allocating responsibilities.
Assess Risk Tolerance: Determine the client's risk tolerance level. Some contracts, like Design and Construct, involve more risk for the contractor regarding design accountability, while others, like Lump Sum, provide a fixed price but may limit flexibility.
Consider Collaboration Needs: Assess the level of collaboration required between the client, contractor, and other stakeholders. Contracts like Early Contractor Involvement (ECI) and Allianz emphasize collaboration, making them suitable for projects where ongoing communication is crucial.
Communication Structure: Evaluate the preferred communication structure. Contracts like Managing Contractors may benefit clients who prefer a single point of contact. Those who seek involvement throughout the project may find Design and Construct more suitable.
We are a team of Architects, Interior Designers, and draftsmen collaborating with Estimators, Builders, and tradespersons who Specialise in the Design and Construction of Inspiring Environments that enrich the quality of life of those who inhabit the Education, Aged Care, and Hospitality Sectors.
Our mission is to build lasting relationships with clients by consistently exceeding expectations and maximising outcomes within their budgets.
We're here to help you achieve exceptional outcomes. Whether planning a new project or seeking expert guidance, Coverite Projects is your trusted full-project partner. Share your project needs with us, and let’s explore how we can bring your vision to life.
