How we work

D&B contracts’ strongest advantage is they proport to offer a risk-free solution for the client but this claim has to be checked against the evidence of the last 3 challenging years. After COVID, Brexit, price increases and supply chain chaos, D&B has failed and been proven that it’s not a risk free, cost effective and efficient procurement route. The strength of the risk is only as strong as the main contractor’s cash flow.

In today’s market, with inflated labour and materials costs impacted by Covid, Ukraine war, Russia’s sanctions on exports and closure of China production due to Covid, very few main contractors are able to offer meaningful JCT D&B fixed price contracts. The ones that offer D&B with any actual security are Tier 1 contractors. Generally they have priced in the inflationary market risk and as a result the contract price is unviable for most of the mid-range projects.

The other Tier 2 contractors with more reasonable prices are struggling to offer performance bonds and are putting so many caveats into the contracts that the risk sits client side anyway. In reality due to the many insolvencies following all of the above, recent events and the rigid legalisation that is now being enforced on design, the era of the JCT D&B contract is coming to an end.

Whilst cost risk sits with the client on JCT CM, so does contractor profit which can then be considered a larger contingency pot to mitigate risk, a well-managed procurement and an effective contractual administration transfers most of that risk to trade contractors by making sure all elements are included.

As part of the process a fully tendered subcontract package schedule gives a far more detailed cost certainty and transparency on what sits within the design and build. Payments go direct where they are supposed to go – the sub-contractors working on your project with no cross contamination from a main contractor’s overall cash flow – which may well be weakened by other unrelated poor paying projects that cover losses. The client gets full control.

With Construction Management we can also use a package of performance bond and insurance with major trade contractors, replacing the traditional D&B performance bond. With more contractors going into administration, lots of HA’s, banks and developers are being caught out having to step in. By placing bonds direct with trade contractors, the impact of someone going into liquidation are much reduced. Work can continue on site and the major demobilisation and remobilisation costs, and subsequent delays are avoided.

Assured CMS pride themselves on delivery and the passion for success, we understand that a client can from time to time be concerned by what can incentivise a CM company to deliver on time and budget. There are mechanisms that form part of the CM JCT contract to allow for this, which of course can be discussed and agreed to give peace of mind.