Contracting as a PM
The purpose of this article is to analyse the methodology used by a main contractor in large construction projects. The main contractor is expected to oversee and involve subcontractors and suppliers, along with manage the overall project. Furthermore the purpose of this article is to introduce theories and methods that can be used by contractors in civil engineering projects. The hypothesis of this article is, that it is possible to use Supply Chain Management (SCM) tools in order to manage, involve and oversee suppliers in large construction projects. The article aims to draw parallels between SCM and Contracting, finding similarities and differences.
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General
The term contracting often describes the act of entering a formal and/or legally binding agreement. In civil engineering, management contracting is the agreement that the work is carried out by several different work contractors, who are either contracted to the client or a management contractor (main contractor). The various different work contractors may include suppliers, manufacturers, retailers or workers, and it is the job of the main contractor to manage them all.
Supply Chain Management (SCM) is the flow of materials within a company and/or organisation. The goal of SCM is to manage upstream and downstream relationships with suppliers and the client, in order to achieve enhanced value in the final market with less cost to the supply chain as a whole [1]
Contracting
A general contractor (main contractor) is responsible for the coordination of a construction project, and will oversee the daily progress at the site. The contractor will manage and be responsible for turnkey, main, and individual trade contracts[2], and ensure communication between suppliers, traders and the client throughout the course of the project. The client employs the contractor after a bidding process; where as estimated price is presented. The price should cover cost of overhead, materials and equipment needed. The client will choose a contractor based price, quality and/or reputation. During the project, the main contract will transfer the project management from the client to the general contractor. The general contractor will manage suppliers of materials and equipment, as well as labour and services needed for the project. The general contractor may hire subcontractors to deliver turnkey projects, which are fully functional upon delivery. The general contractor will also be responsible for safety on the construction site, managing personnel, and applying for the necessary permits.
The client may choose to coordinate and manage the project themselves, by not hiring a general contractor, but by entering contracts with several individual trade contractors. The client could also choose to split the management of the project by making grouped contracts, which allow related trades to coordinate their work. By using grouped contracts, the client will have fewer contracts to manage contrary to the individual trade contracts.[2]
