Management Contracting

Introduction

Contract management, or MC (Management Contracting), is a method where the employer appoints a company or individual to oversee project execution. Thus, the contractor is responsible for determining project execution methods, establishing the organizational chart, and hiring personnel. In this approach, the contractor or individual receives a percentage of the incurred expenses as compensation for project management.

This contract benefits both parties since the employer does not pay any overhead or profit to the contractor, only covering necessary costs outlined in the agreement, management of the project, human resources, and equipment. This results in cost savings for the contract. On the other hand, the contractor does not incur execution costs and does not take on commitments, receiving only a percentage of the total expenses due to their expertise in management. The speed and quality of project construction in this method are higher than in others.

Advantages of the Management Contracting Method (MC)

As MC supervises the execution operations of construction contractors, there is no need for consulting engineers’ supervisory services. The presence of MC fosters coordination among construction contractors and resolves issues related to work interference. Providing support services to construction contractors accelerates their execution operations and addresses their weaknesses. Since MC does not directly participate in design and execution, it can focus exclusively on management, planning, and cost control. Acting as a member of the employer’s team, MC has no profit motives and solely aims to satisfy the employer and protect their interests.

Who is the Project Manager or MC Consultant?

The project manager, management contractor, or MC consultant is an individual, group, or organization that manages your project on your behalf. In other words, the MC consultant is essentially the project’s management contractor. For instance, your project may include the following components:
– Employer (Client)
– Engineering Consultant
– Contractors
– Customer

Aligning all project components is a critical task that employers may prefer to outsource. In this case, the project manager or MC consultant is responsible for coordinating all project elements, implementing project management standards, planning the project, monitoring progress, managing project risks, documenting the project, and handling other related issues.

Benefits of Engaging an MC Consultant

When a project is defined, assigning a project manager is essential. The project manager has numerous responsibilities according to project management standards. The presence of the MC consultant enhances coordination among contractors and resolves issues arising from work overlaps. Supporting services provided to contractors expedite execution operations and cover their weaknesses. As the MC consultant does not directly participate in design and execution, they can focus on management, planning, and cost control without being bogged down by direct execution issues. Importantly, the MC consultant, as a part of the employer’s team, avoids contractor profit motives and aims solely to fulfill the employer’s interests and protect the project.

Goal of Using an MC Consultant

The aim of Arman Management Guidance Company in providing MC consulting services is to oversee project execution and offer MC services to enhance the chances of success in large, significant projects and to provide scientific and principled management consultation based on the best and most up-to-date international practices. Effective project management, optimal knowledge management, and proper documentation are crucial for future execution in similar projects.

To increase the likelihood of project success, particularly in organizational agility, improving and expediting communication among various project components, developing a project organizational structure with clearly defined roles, responsibilities, accountability, and authorities, monitoring programs and project reports, enhancing the employer’s supervisory power, documenting meetings, following up on resolutions, translating them into plans, managing risks, addressing challenges and incidents, documenting projects, and managing the extraction, registration, circulation, and optimal access to knowledge produced during project execution, especially in research projects, the use of the MC consultant is among the strategies recently implemented in similar projects.

Conclusion

The management contracting method (MC) is often employed in large industrial projects, particularly in petrochemical projects within our country. Management contracting represents an efficient and proven execution model for chemical engineering projects that can lead to increased quality, reduced costs, and expedited project completion. However, selecting the right contractor and precise contract management are key factors for success in executing MC projects.