The [Ritchie] Method of an early Negotiated Trade Contractor GMP Contract (NTC GMP C), 2016

The Position of a Main Contractor

Under the NTC GMP procurement method some projects may require a Main Contractor, others not. If competent construction management exists within the Client body, then no Main Contractor is necessary. The combination of Client in-house or appointed PM and CM are sufficient to enable the project to be realised efficiently and cost-effectively. Where this expertise does not exist within the Client body, a Construction Management consultant/company is an appropriate appointment.

Few Main Contractors have any trades in-house. They simply manage the construction process. There are only a few large Main Contractors left in the UK who have all the necessary trade construction teams [among these are Laing O’Rourke, Gilbert Ash, Ardmore], and a number of smaller contractors.

In our opinion it is vital to have secured the key Trade Contracts before interviewing any Main Contractor, if indeed a Main Contractor is required. Often the Main Contractor’s contract conditions can be excessively onerous on Trade Contractors, particularly during periods of risk aversion (which is the current culture). The Main Contractor would be obliged to take on the Trade Contractors as domestic sub-contracts. They are not nominated in this method.

[The argument most often made is that the Client will want 100% cost certainty, and that the only way to obtain this is through a Main Contractor lump-sum price, with the Main Contractor taking ALL risks including insolvency of Trade Contractors. The Client is not necessarily obtaining value for money, but simply paying a sizeable sum to pass on the risk. The Main Contractor is essentially acting as an insurance company, and able to establish a very healthy bottom line profit before starting. Main Contractors enjoy this position because they not only control the financial tune of the project, but then also control the design though their choice of Trade Contractors, some of whom may not be technically suitable for the particular project.]

The position of the Client

• Control of the project in respect of trade contractor selection.
• Programme
• Holds price risk without cost premium
• Needs to provide construction expertise management resource
• Coordinates all trade contractors
• Common services for the site.

Preliminaries

Preliminaries are provided and paid for by the Client, whether directly or indirectly through negotiated costs with the Trade Contractors by the CM.

Issues are:

• Interface management – less of an issue on simple building, more so on complex or existing buildings.
• Common services for the site – clearance, setting up, setting out, access including scaffolding, craneage, general plant and temporary works.

Risk

Although risk remains with the Client throughout the project, cost is established and fixed very early and the project can move ahead more quickly and with more certainty. Also, and crucially, the risks are minimized with regard to construction costs and programme, as these are established immediately before or just after planning permission. Because Trade Contractors are contracted to the Client, they are reassured and the experienced (respected) Client should enjoy benefit from better Trade Contractor pricing.

Although any issues consequent to the insolvency of a Trade Contractor during the project would remain with the Client, a cohesive and supportive approach to the problem will mitigate its impact. We encountered this during the financial crisis of 1992, with the Albert Cultural Centre for which Ian Ritchie Architects were not only the architects but also the appointed Construction Managers (CM). The steel frame Trade Contractor for the project went under because of delayed payments from two major jobs – one at Canary Wharf and the other at Euro Disney. Nevertheless, astute decision making with the support of the Client, and our ability to relate to the industry ensured the project was delivered on time, to the quality envisaged and within budget.