Early Contractor Involvement (ECI)

Early Contractor Involvement (ECI) is a well-known term in the construction industry and among quantity surveyors. Let’s explore its importance, meaning and benefits for construction projects and contract parties in this blog post.

What is Early Contractor Involvement?

ECI is a construction contracting method that enables a builder to become involved in the work on a construction project before the project design has been completed. Since the total project cost is not yet known at this stage because the design has not been finalised, the contractor provides insights and predictions regarding overheads, preliminaries, potential profits, and time frames of the project.

The Early Contractor Involvement process involves sharing responsibilities between a contractor and a designer. Contractors can provide valuable suggestions and input about major design and construction decisions, which can have a positive impact on the quality of the project.

ECI is well-suited for complex projects, and its methods can significantly decrease the construction project’s risk by conducting design reviews that analyse buildability, value engineering, and material delivery.

What are the benefits of Early Contractor Involvement?

ECI allows contractors to suggest potential modifications in the design of the building, which increases the project’s flexibility compared to traditional procurement methods. Studies have shown that ECI can contribute to a cost savings of 7% in total and a time savings of 10% during the actual construction phase.

Therefore, the main benefits of Early Contractor Involvement include:

• Reduced project costs
• Better time management of projects
• Increased transparency over subcontractor pricing
• Improved project quality by obtaining the builder’s input regarding major design components.

How does Early Contractor Involvement work?

The Early Contractor Involvement process can be divided into two phases: a planning phase (pre-construction phase) and a construction phase.

The pre-construction phase is where the contractor’s inputs are utilised to achieve better time, cost, and quality standards for the project. During this phase, the contractor is engaged in providing final predictions regarding the scope and cost of the project, as well as giving design feedback. Additionally, this phase often involves identifying and mitigating project risks and finalising work on contracts that will begin in phase two.

The second phase, which is the construction phase, involves carrying out the actual construction work based on the findings and agreements completed during the previous phase.

The value of ECI in building procurement

The ECI model has proven to be highly effective in securing supplies and resources in the volatile market conditions of today. Given the high risk, price volatility, and material shortages characteristic of the supply chain, ECI can mitigate these issues by establishing relationships with contractors early on and forming strategic partnerships.

What are the forms of ECI contracts?

There are three forms of ECI contracts in total:

1. Construction Management (CM) – In this type of ECI, the construction manager oversees the construction project on behalf of the principal and provides preliminaries. The principal hires trade contractors based on the manager’s recommendations, and the construction manager is paid a fee for their work, while the principal holds responsibility for trade contractors.
2. Managing Contractor (MC) – Trade contractors are hired by the construction manager, who is responsible to the principal for the contractors’ actions, omissions, and performance. In this type of ECI, the construction manager is compensated either with a fee plus third-party costs for the construction work or with a lump sum price based on an accurate estimation of the total cost of the contractor’s work.
3. Guaranteed Maximum Price (GMP) – In this scenario, construction managers hire trade contractors who are responsible for their work and must operate within a fixed budget without exceeding it, which needs to be sufficient for all construction costs.

What is the difference between Early Contractor Involvement and traditional procurement?

The primary distinction between traditional procurement and ECI is that, in traditional procurement, the contractor is hired after the project’s design has been finalised and accepted by the project owners. Contractors that will perform the construction work are chosen based on their proposals after the invitation to tender is issued, and principals generally prefer to consider offers from as many qualified and professional contractors as possible.

In contrast, ECI involves selecting a single contractor in the project’s early stages and compensating them on the scheme. The contractor can then influence the project to suggest design changes that can add value to the finished building and enhance the quality of the output.

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Angelo Antidormi

Managing Director at Property & Building Assessments Pty Ltd

Angelo Antidormi, Managing Director with over thirty years of experience in the building and construction industry, leads the team of experts at Property & Building Assessments Pty Ltd, providing professional construction advice and value-adding solutions to clients in areas of dispute, estimation, cost planning, and project management.

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