Construction Management Explained for First-Time Developers

Construction management is a procurement route where you, the developer, hold the trade contracts directly and pay a construction manager a fee to run the site on your behalf. You keep control, and you can start on site before every drawing is finished. You also keep the risk. On a first build, that last part is the whole story.

A first-time developer rang us in March about a mill conversion off Chestergate in Stockport. He had read that construction management was faster and cheaper, and he wanted it. By the end of the call I had talked him out of it. Not because it is a bad route, but because it was the wrong one for a first project, and nobody selling it to him had said so.

Here is what he had not been told.

What is construction management, in plain terms?

In a normal build you sign one contract with a main contractor, and that contractor employs all the trades. Groundworkers, steel, mechanical and electrical, plasterers, the lot. Construction management works differently. You, the client, sign a separate contract with each trade package yourself. The construction manager does not employ any of them. They plan the work, run the site, and coordinate the trades as your agent, for a fee.

So the construction manager sits on your side of the table, not the contractor's. That is the appeal. There is no main contractor adding a margin on top of every trade, and no main contractor's programme you cannot see inside. You get the trade prices direct, and you get an expert running the job whose interests line up with yours rather than with a lump sum they are trying to protect.

How is it different from using a main contractor?

The difference that matters is where the risk sits. Under a traditional or a design and build contract, if a trade package overruns or a subcontractor goes under, that is the main contractor's problem to solve inside their price. Under construction management, it is yours. You hold the packages, so you carry the cost of the gaps between them. A good construction manager manages that risk well. They do not take it off you.

You also carry the client's duties under the Construction (Design and Management) Regulations 2015 in full, and with the trades contracted to you there is no main contractor standing between you and them. That is why our CDM adviser and health and safety team gets involved on these schemes early, before the first package is let.

Three routes cover almost every scheme we see. Here is the short version of how they compare.

Route	Who holds the trade contracts	Who carries package risk	Usually right for
Traditional (JCT)	Main contractor	Main contractor	First-time developers and fixed budgets
Design and build	Main contractor	Main contractor	Developers who want one point of responsibility
Construction management	You, the developer	You, the developer	Experienced clients wanting speed and control

What does a construction manager actually do for me?

They run the job you do not have the time or experience to run. That starts before anyone is on site: breaking the work into trade packages, tendering each one, and setting the master programme in Asta Powerproject so the packages land in the right order. On site they hold the two-week look-ahead, chair the progress meetings, check the work against the drawings, and control the money package by package.

The part first-time developers underrate is the coordination between trades. That is where a build quietly bleeds money, in the joints where the electrician needs the dryliner finished and the plasterer needs the roof watertight. Get the sequence wrong and you pay for the same work twice. Our construction management team does this daily, and if you would rather have that programme and cost discipline set up properly from week one on a traditional contract, our project management service covers the same ground.

What does construction management cost?

The management fee usually runs at 2% to 5% of construction value, depending on the size and complexity of the scheme. On paper that looks like the cheaper route, because you are not paying a main contractor's overhead and profit on top of the trades. In practice the saving is real only if the job is well run. A poorly coordinated construction management project loses far more in rework and delay than the main contractor's margin you avoided.

There is a cost most developers miss. Under construction management you need more of your own time, or ours, because no single contractor is absorbing the day-to-day decisions. Someone has to answer the questions a live site throws up, every day, quickly. That is a real resource, and it belongs in your budget from the start.

Is construction management right for a first-time developer?

Usually not, and I will say that even though it is the larger fee for us. Construction management rewards experience. It suits a developer who has run schemes before, has the cash flow to carry a package that goes wrong, and understands that holding the trade contracts means holding the risk. A first project rarely has any of those. The route that protects a first-time developer is a fixed-price design and build, or a traditional contract with a main contractor carrying the risk while you learn how a site behaves.

I will give you a failure of our own, because it is the honest answer. A few years ago we took a first-time client down the construction management route because they wanted the speed. A groundworks package hit unforeseen ground and overran, and with no main contractor to absorb it, the client carried the cost themselves. It was a hard lesson for them and for us. We should have put them on a fixed price and told them to wait a month. We say no to that pairing now, a first-timer and construction management, unless there is a very good reason.

The right way to make this call is with someone who is paid the same whichever route you pick, and can be honest about it. That is what independent advice is for. Sound cost management and quantity surveying at the start will tell you which route your scheme and your experience can actually support.

What makes a Stockport or Greater Manchester scheme different?

The ground and the buildings, mostly. A lot of what is being developed in Stockport right now is Victorian mill stock, red brick and often listed, sitting on former industrial land. The town centre is in the middle of a regeneration worth more than a billion pounds, with around 130 acres of brownfield in Town Centre West earmarked for up to 3,000 new homes, and schemes like Weir Mill turning out 253 apartments from a Grade II listed complex. That kind of site is full of the surprises construction management exposes you to directly: made ground from old dye works, culverts feeding the Mersey, brickwork you cannot cut into without listed building consent.

On a traditional contract those surprises are the contractor's risk to price. Under construction management they land on you. A wet Greater Manchester winter makes it worse, because every week the building is not watertight is a week the trades behind stand idle, and on construction management you are paying each of them. This is exactly the kind of scheme where the procurement route decides whether a first-time developer sleeps at night.

None of this rules construction management out. It just means the safety net a main contractor gives you is worth paying for on an unpredictable site. Most first sites in this area are unpredictable.

So what should you actually do?

Construction management works. The real question is whether it fits your scheme and your experience, and that is worth an hour with someone who will tell you the truth even when the truth costs them the bigger fee. We have been giving developers, banks, funders and public bodies that kind of straight advice across Greater Manchester and the UK since 1992, for clients including Aviva, Barratt Homes and NatWest Bank.

If you are planning a first scheme in Stockport or anywhere in the North West, talk to our team at Spring & Co or call us on 0161 476 4456. We would rather steer you to the right route now than manage you out of the wrong one later.

Written by Phil Spring, founder of Spring & Co, construction and property consultants working across Greater Manchester and the UK since 1992.