Construction Management Agreement UK: Key Guide

What this document is

A construction management agreement is a contract under which the client appoints a construction manager to plan, coordinate and supervise the works, but the client contracts directly with each trade contractor doing the physical building. The construction manager is engaged as a professional consultant, not as the builder, and does not normally take on the financial risk of delivering the works for a fixed price.

That risk stays with the client, spread across the individual trade packages. This is the main feature that sets construction management apart from general contracting, where one main contractor prices the whole job and absorbs most of the delivery risk.

It is also distinct from management contracting, where a management contractor sits in the middle and holds the trade contracts itself. Construction management tends to suit experienced clients, developers, or those advised by a strong project management team, because the client carries more exposure to cost overruns and delay but keeps far greater visibility over pricing, programme and design changes as the project unfolds.

How to use this document

1. Decide whether construction management is the right procurement route. Before committing, weigh up the project's complexity, your appetite for carrying trade package risk, and how fixed the design really is. This route works best where speed, flexibility and direct cost transparency matter more than a single fixed price, and where the client team has the capacity to oversee multiple contracts.
2. Appoint the construction manager on clear terms. Agree the scope of services in writing, covering pre-construction input, programming, procurement of trade packages, site supervision, cost reporting and health and safety coordination. The fee structure, typically a lump sum or percentage, should be defined, along with duties of care, professional indemnity insurance levels, and how the appointment can be terminated.
3. Procure and contract directly with trade contractors. The construction manager usually runs the tender process for each work package, but the contracts are signed between the client and each trade contractor. Make sure the packages dovetail cleanly, with no gaps in scope and consistent terms on programme, payment, retention, defects and collateral warranties for funders or future purchasers.
4. Run the project with active cost and programme reporting. Because the client carries the risk of trade package overruns, regular cost reporting against the target or estimated total is essential. The construction manager should produce forecasts, change control logs and programme updates, and flag early warnings promptly so decisions on scope, sequencing or design can be made before problems compound.
5. Manage completion, handover and defects carefully. Practical completion, snagging and the defects liability period operate at trade package level rather than across one main contract. Keep clear records of sectional completions, warranties, as-built information and outstanding items, and make sure the construction manager's role during the defects period is set out in the agreement.

Common questions