I read with interest your Open Mike column about ditching the main contractor (9 May, page 41). As head of development monitoring at Malcolm Hollis, I have also seen developers appointing works packages or trade contractors directly to save the main contractor on cost – and it is not just the subcontractor that suffers.
There is a greater risk for all parties, particularly in the current economic climate and for the bank that is funding the project. First, the developer retains all the risk. Second, smaller developers may lack the resources to set up a robust construction delivery process or the experience in managing subcontractors. Also, as contractors are only appointed when needed, there is no assurance of their availability or that of materials, which could affect delivery and cost control.
That said, if you are determined to do away with the main contractor for whatever reason, there is an alternative way of procuring subcontractors, managing a project, and protecting the developer’s and the bank’s interests that does not involve the main contractor – through appointing a reputable construction manager. On large and complex schemes, shorter design times for early packages mean a quicker start on site, materials going up in price can be stored and insured, while longer lead-in times allow for cost savings on materials that are getting cheaper. Developers can respond to the market.
The pros and cons must be weighed up but, during a downturn, it is crucial to remember that cutting corners is a dangerous game.
Justin Bird, associate, Malcolm Hollis