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05 February 2024

Navigating Construction Projects with a Focus on Types of Building Contracts

Embarking on a construction project involves critical decision-making, with the choice of the right contract playing a pivotal role.

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In this article, we explore various construction contracts in the context of school, aged care and general commercial projects, shedding light on their benefits and risks to both the client and 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
(Project Management)



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.

Enables project to work at speed

Fixed price, defined scope.

Streamlined process, cost certainty.

Flexibility without the cost impact

Harness the experience and wealth of knowledge of design and building professionals from start to finish.

Single point of contact, cost efficiency.

Shared goals, innovation.

Benefit to Head Contractor

Involvement in early stages ensures buildability

Works can be scheduled in to ensure project deadlines are met

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.

 Choosing the right construction contract is a critical decision that can significantly impact the success of a project. Here are three key considerations a client should analyse when making this choice:
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1.    Project Objectives and Complexity:

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 in selecting a contract that aligns with these objectives.

Evaluate Project Complexity: Assess the complexity of the project, including its size, scope, and technical requirements. Complex projects may benefit from contracts that allow for flexibility and collaboration in design and construction phases.

2.    Risk Tolerance and Management:

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 in choosing a contract that allocates responsibilities appropriately.

Assess Risk Tolerance: Determine the client's risk tolerance level. Some contracts, like Design and Construct, involve more risk for the contractor in terms of design accountability, while others, like Lump Sum, provide a fixed price but may limit flexibility.

3.    Collaboration and Communication Requirements:

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. For clients who prefer a single point of contact, contracts like Managing Contractor may be beneficial. Those who seek involvement throughout the project may find Design and Construct more suitable.

Coverite Projects – About Us

We are a team of Architects, Interior Designers & Draftsmen collaborating with a team of Estimators, Builders & Tradespersons who Specialise in the Design and Construction of Inspiring Environments that enrich the quality of life of life of those that inhabit within the Education, Aged Care and Hospitality Sectors.

Our mission is to build lasting relationships with our clients by consistently exceeding expectations & maximising outcomes within our client's budget.


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