A construction management or project management contract is a contract in which the contractor commits to the full management and implementation of the project and in return receives a percentage of the total project costs as a contracting fee. The way of setting up such contracts is different depending on whether the contracting party is a government or not and requires compliance with certain conditions.

Contracts and contracts are divided into different types, including contracts in the field of contracting. In the meantime, one of the most used types of contracting contracts is the construction management or project management contract. This type of contract is written between the employer and the contractor of a project and regulates the relationship between them.

Since the amounts and costs of construction management contracts are generally very high, it is necessary for the parties to be familiar with the nature, types and conditions of writing this type of contract and to be aware of its various parts. On the other hand, because the contract management contract is the best method for the quick implementation and completion of operations related to the building, knowing its details becomes doubly important.

What is a construction management?

Contract management or project management is always considered as one of the challenges of construction projects due to the technical and executive complexities, the variety of expertise required, the need for coordination between different people, etc. Writing the contract in this area has helped the parties to reduce the risks and technical risks of the project to a great extent and provide more security for themselves until the completion of the project.

The construction management or project management contract is actually a contract written between the employer and the contractor of a project, during which the contractor is committed to the complete management and implementation of the project (from zero to one hundred) and in return, a percentage of the total costs of the project to It receives the title of contracting fee or contract management percentage.

In other words, in this type of contracts, the contractor is responsible for the implementation and completion of all operations related to the construction of a building or project, and the employer will also be present as an investor and supplier of financial resources for the project. In most cases, the construction management is written before the start of building operations, and sometimes it is arranged in the middle of it.

Types of construction management

These contracts are divided into the following types according to the type of project management:

Management construction
Trust agreement
Salary agreement
Special agreements (global)
Design and implementation agreement
The contract with the appointment of the general contractor
Finance agreement

It is important to pay attention to the fact that each of the mentioned contracts has its own definition and different characteristics in terms of execution method, calculation method and payment of costs and profit.

Construction management terms

The point that should be taken into consideration in construction management is that the terms and conditions mentioned for such contracts, in the text of the contract, are respected and acted upon. If these criteria are not included in the text of construction management contracts, this contract will be considered as having no legal effect.

The first condition of the construction management is that according to Article 13 of the Labor Law, in cases where the work is done through contracting, including construction management, the employer is obliged to enter into a contract with the contractor in such a way that the contractor commits to apply all the provisions of the labor law to its employees.

Construction management percentage

In this type of contract, the contractor receives a percentage of the construction costs from the employer. The method of payment and receipt of fees is specified in the contract. Factors that affect the percentage of this agreement include the scope of the project, the amount of investment, the amount of work, the type of executive plan, the weather conditions of the environment and the amount of investment.

Influential people in construction management

Employer: The employer is a natural or legal person who bears all the costs related to the construction of the project. The employer may be the owner of the land himself or as a deputy owner.
Contractor: A contractor is a natural or legal person who is responsible for managing the construction project. The contractor can be responsible for providing all the equipment, materials and manpower at the expense of the employer or he can be responsible for providing the equipment and manpower and the employer provides the materials himself.
Consultant: The consultant is responsible for drawing up a suitable contract according to the employer’s wishes. The presence of a consultant makes the employer aware of the risks, claims and losses that may occur during the project. Also, the consultant has the task of preparing a contract that can determine and regulate the relationship between the parties of the contract and divide its risk between the parties of the contract.

What are the benefits of construction management?

Cost reduction: The payment of the contract manager’s fee is gradual and proportional to the progress of the project. Also, the contractor’s goal is to satisfy the client and protect its interests, so it does not have profit-seeking tendencies.
Time reduction: reducing the project execution time is directly in the interests of the contract manager. For this reason, he will make great efforts to reduce the time of the project and its quality implementation.
Reducing the employer’s responsibilities: By entrusting the project to the contract managers, the project management work is removed from the employer’s shoulders. Therefore, technical issues, safety, communication with neighbors, contractors, except for the exact implementation of the plan are the responsibility of the contract management team.
Competition of contractors: Since in this method, the executive operations are divided into several parts, the contractor tries to deliver the works on time and correctly so that he can take on more works.

Important points of construction management

The contract manager must provide the employer with a copy of the contracts concluded with the contractors and subcontractors.
All payments to contractors and subcontractors are made according to the percentage of work progress.
One of the most important duties of the employer is to pay the fees specified in the contract.
The contractor has the duty to prepare the statement of expenses with the approval of the supervising engineer and deliver it to the employer once a day at most.
The contract manager makes an initial estimate of the project implementation costs based on the plans, technical and operational specifications, and after the employer’s approval, the contract manager must start the implementation operation.
The contract manager is the trustee of the employer and has the duty to take into account the interests of the employer in all stages of construction implementation.
One of the most important duties of the contract manager is complete and accurate supervision to establish the necessary coordination for the timely and correct implementation of the building.
The contract manager is responsible for all the executive activities of the building, as well as appointing contractors for each part of the building and concluding contracts with them.
In the construction management, it should be mentioned that the contract manager cannot hand over the subject of the contract to another person under any circumstances.
In the construction management, it should be mentioned that the procurement and purchase of all materials and the purchase or rental of tools and machinery are the responsibility of the contractor.
The action to obtain water, electricity, gas, etc. branches is the responsibility of the contractor and the cost of the employer.
From the time of delivery of the workshop to the time of temporary delivery of the building to the employer, the contractor is responsible for the maintenance and protection of the building and the purchased items on the building site, of course, at the expense of the employer.

Conclusion

In order to be fully familiar with construction management and be able to conclude a reliable construction management, you must know well the obligations and responsibilities and the limits of authority of the parties to the contract, the terms of the contract and how to set up the contract, and be able to understand the conditions that may occur during the implementation of the project. Anticipate and determine a suitable solution for them.

If you have any questions about construction management, you can ask your questions to the advisors of Rooyesh Construction Group.