Case Study: Full PM Partnership on a Medium-Density Development

Details have been generalised and client information withheld at their request.

The client

A first-time property developer with a background in construction (a skilled tradesperson who'd worked on residential projects for fifteen years) had purchased a site in Melbourne's western suburbs with approval for a six-townhouse development. Their construction knowledge was hands-on and deep; their project management and contract administration experience was limited.

They'd negotiated with a builder and received a head contract price. Before signing, they engaged us for a contract review — and the conversation from that review led to a Full PM Partnership engagement for the entire project.

The scope of the PM engagement

The engagement covered:

Head contract review and negotiation support
Design coordination through the construction documentation phase
Tender review and recommendation
Procurement of trade packages (for items not in the head contract)
Monthly cost reporting throughout the construction phase
Variation management and cost plan maintenance
Progress claim review and certification
Programme monitoring
Defects inspection and DLP management
Final account reconciliation

Key moments in the project

Pre-construction: the contract negotiation. The initial head contract included an unlimited principal-supplied items schedule and a variation clause that allowed the contractor to claim additional overhead and profit on all variations regardless of value. Both were negotiated. The principal-supplied items were capped, and the variation overhead and profit was fixed at an agreed percentage.

Month two: the substructure surprise. Rock was encountered during excavation at a depth not anticipated by the pre-construction geotechnical report. The contractor submitted a latent conditions claim. The claim was reviewed against the contract's latent conditions definition — which, in this case, was standard AS4000 language — and the contractor's entitlement was assessed against the pre-construction information provided and what a competent contractor should have anticipated. The claim was partially accepted at a negotiated figure, documented, and absorbed within the contingency.

Month four: a subcontractor collapse. The electrical subcontractor entered administration mid-project. The head contractor's subcontract included a termination for insolvency provision; they exercised it and re-tendered the remaining electrical works. The re-tender was reviewed independently to confirm the replacement price was reasonable. The cost impact was modest — the electrical package was approximately 60% complete, and the re-tender rate for the remaining works was comparable to the original.

Month eight: variations discipline. By the eighth month of a ten-month programme, the variation register held 22 items. On a project this size and complexity, that was a reasonable count — the discipline maintained throughout the project meant each variation was documented, priced, and approved before the work was done. There were no end-of-project surprise claims.

The outcome

The project achieved practical completion two weeks behind programme — attributable to the substructure delay, for which an EOT had been formally approved. The final account was agreed within one month of practical completion, at a figure 3.8% above the original contract sum.

For a first-time developer on a medium-density project with an unforeseen site condition and a subcontractor insolvency, this outcome was considered strong. The developer's own assessment was that without independent cost oversight, both the latent conditions claim and the subcontractor replacement would have cost significantly more.

What the developer said

The developer noted that the most valuable part of the engagement wasn't any single intervention — it was knowing at any given point what the actual cost position was. On a project where their personal financial exposure was significant, having a reliable, current cost plan was more valuable than the specific issues it helped resolve.

Full PM Partnership is available for projects from $500K upward. Contact us to discuss your development.