Construction Management vs Traditional Procurement: Project Fit
Choosing the procurement route for any project represents one of the earliest and most significant decisions, as this influences the rest of what happens in terms of risk, cost, and the level of control an employer maintains over the works. Construction Management and Traditional Procurement represent the extremes of this decision, and making the wrong decision could result in having an unintended degree of risk or loss of flexibility.
This article compares both pathways against the practical considerations that really affect the decision about whether to go down either pathway, such as cost certainty, programme, design maturity, risk allocation, and employer involvement, for you to determine which one is suitable for your particular situation.
Why Does Procurement Route Matter?
The method of procurement will define how the project team is structured, the allocation of responsibilities, and the relationship between the employer and designers and constructors. It may also determine when construction can start, the development of cost, and who bears the risks or how risks can be transferred from the employer to others.
According to JCT, procurement is a procedure whereby the client evaluates the benefits, risks, and costs of the project prior to deciding on the best procurement method. Hence, time, cost, quality, the client’s capability, and risks are some of the factors to be considered during procurement planning.
What Are Construction Management and Traditional Procurement?
In practice, construction management and traditional procurement organise the design and construction process differently. In the construction management field setting, typically the employer appoints trade contractors while a construction manager coordinates the work delivery. Traditional procurement generally separates design from construction and normally involves the employer choosing a design team before the tendering process for construction works.
| Route | Basic Arrangement | Typical Characteristics |
|---|---|---|
| Construction Management | The employer selects the construction manager and enters into contracts with the separate trade contractors individually. | Design and construction may be concurrent; high employer involvement; individual work packages; employer’s increased risk exposure to construction. |
| Traditional Procurement | The employer selects the design team and usually enters into a construction contract after the design and tendering stage. | High degree of process sequencing; increased design development before bidding; the principal contractor carries out the construction. |
Construction Management vs Traditional Procurement: Key Differences
The comparison between these two fields does not sit on a list of advantages and disadvantages alone. Instead, the routes should be assessed against the project characteristics that matter in commercial terms. The comparison in the table below provides aspects as an initial view before evaluating how each factor influences the procurement decision:
| Project Consideration Aspects | Construction Management | Traditional Procurement |
|---|---|---|
| Cost certainty | It is high since there is a fixed price or near-fixed price that is normally agreed upon before construction commences. | Lower, since the total cost will not be set until all trade packages have been tendered, which can occur quite late in the programme |
| Programme | The design is often completed before construction commences, and this may cause delays in the project. | Design and construction can overlap, since trade packages can be tendered as soon as they are prepared, without waiting for the whole design to be completed |
| Design maturity | High, design should be completed enough before tendering. | Lower, since design can progress while trade packages are tendered sequentially |
| Risk allocation | The general contractor carries the construction risk in a fixed-price contract. | The employer assumes construction risk directly, as it has signed individual contracts with each trade contractor |
| Employer involvement | Lower day-to-day involvement since the general contractor controls the supply. | Higher, as the employer is responsible for administering and coordinating several trade contracts |
| Flexibility | Low, changes after tendering normally involve variations that may impact costs and programme. | Higher, as changes may be easier to incorporate since trade packages are separately tendered |
| Project complexity | Clear and stable designs with minimal changes. | Fast-track or complex projects that require flexible design, or when employers wish to commence site work early |
| Contractual relationships | There are direct contracts between the employer and various trade contractors and the construction manager. | The employer has a direct relationship with the design team and the contractor for construction |
When Can You Know Construction Management or Traditional Procurement Fit Your Project?
The most suitable way becomes more apparent when the project situation is compared with the features of all procurement methods. Construction management would be a better way to go for a project that requires more flexibility, progressive package procurement, or construction overlapping, but traditional procurement would be more suitable for a project where the design could be finalised beforehand.
The explanation below gives you a clearer comparison to identify which route aligns closer to your project’s objectives, resources, and requirements. Just a disclaimer: these are not fixed rules because a project may contain characteristics associated with both routes, so the final decision depends on your consideration regarding the project circumstances:
Construction Management
Construction management tends to suit your project if:
- The scope of work is large or complex
- The commencement of work at site is an important factor
- The design will continue to evolve even after the construction has started
- The employer has the expertise, resources, and is ready to assume direct construction risks in return for greater control and flexibility
- The employer, or its commercial team, has the capability of administering numerous trade contracts instead of having the responsibility undertaken by one general contractor
Traditional Procurement
Traditional procurement will be suitable for your project if:
- It can be designed almost to completion before construction commences
- The client prefers to have cost certainty rather than flexibility
- The project is small or less complicated
- The client does not have the capacity within its organisation to take up several trade contract direct from the clients
- The client expects no major changes to the scope of work after commencement of the works due to the increased costs incurred in making such changes
Factors to Weigh Before Choosing a Procurement Route
Before choosing either construction management or traditional procurement, the project team needs to evaluate both options related to the specific project needs. Other important considerations include design maturity, programme needed, cost certainty, risk allocation, degree of employer’s involvement, project complexity, flexibility, and availability of appropriate resources. You should consider these factors together rather than only a single factor.
The next step will be analysing which route is more suitable based on the requirements above. For instance, a project that requires early construction work and further development of the design may require a more flexible route. A project that already has a solid design and a high need for price definition at the stage of construction may require a different strategy. However, the final decision still depends on the project’s needs and on what the employer can afford. Look at the factors to consider below to know what suits best:
| Factor to Consider | What It Involves |
|---|---|
| Project objective | To establish the relative importance of cost, programme, quality, flexibility, and control. |
| Design maturity | The degree of completion and coordination of the design at the planned procurement stage. |
| Programme requirement | Whether design and construction have to overlap. |
| Cost requirement | To establish the degree of price certainty prior to starting construction. |
| Risk tolerance | Which risks the client can tolerate, manage, or transfer. |
| Client’s capability | The resources available technically, commercially, and administratively. |
| Project complexity | The specialised packages, interfaces, sequencing, and coordination needs. |
| Flexibility | The potential for changes in design and scope during construction. |
| Supply chain | Availability and capability of the trade contractor and main contractor. |
| Contract structure | To ensure that the planned contracts appropriately allocate responsibilities |
Construction Management vs Traditional Procurement: Why Knowing the Distinction Matters
The procurement route and the construction contract are two related fields but have different concepts. The procurement route determines how the project is arranged and the involvement of the parties involved, while construction management lays down the legal rights and responsibilities of the parties involved.
For example, according to JCT, the traditional/conventional procurement and management procurement are two procurement routes, and it offers different forms of contract that would suit each procurement route. The Standard Building Contract is the right form of contract for a project that uses the traditional/conventional procurement route, and its construction management arrangements comprise the Construction Management Appointment and Construction Management Trade Contract.
Expanding Knowledge to Support Procurement Strategies for Your Project
Selecting which procurement route suits your project requires a deeper understanding of project planning, tendering, cost and commercial management, contract administration, and construction delivery stages.
To support that, professionals who have been working in the field can strengthen their knowledge through a structured construction management training programme can complement practical experience by bringing these disciplines together to understand construction delivery and the commercial considerations behind every procurement decision.
Frequently Asked Questions
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Is Construction Management riskier than Traditional Procurement? For the employer, typically yes, because construction management makes direct contracts with each individual trade contractor and does not shift construction risks to a single main contractor via fixed-price contracts. The answer will depend on how resourceful the employer is in managing the risks. |
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Can a project change its procurement route mid-project? No, because each procurement route uses a different contractual arrangement involving the employer, contractor, and trade contractor, and by then, there might already be existing contracts. The procurement route is usually determined earlier, when no contract has yet been made. |
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Is the procurement route equivalent to a construction contract? No. The procurement route defines who will contract with whom and the risk allocation process, whereas the construction contract, like the JCT contract, is the actual contract that will be put in place under any chosen procurement route. |
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Does Traditional Procurement always result in a fixed price? No, it has been designed to ensure that there is cost certainty when the design is advanced enough to be tendered. This is one of the benefits of this procurement route over others where cost certainty will only happen at a later stage. |
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Which procurement route is common in the UK? Design and Build is now the most common procurement route in the UK, although traditional procurement is still very common, especially when cost certainty and the advancement of the design are important considerations. Construction management is not as common as the other two procurement routes. |