Articles > Construction

How do Early Contractor Involvements (ECI) Work?

April 17, 2021   Liv ChumPhilip Evangelou

Traditionally, construction contracts only allow the principal contractors to be engaged in projects once major decisions and design details have been completed. However, an early contractor involvement- also referred to as an ‘Early Contractor Engagement’ (ECE) – is a form of construction contracting that allows the principal contractor to be involved in the early construction phase of a project before the design has been completed. 

The primary advantage of involving the contractor at the contract stage, is the ability to get their feedback at this early stage of the project. They can provide insight into preliminary and overhead costs, timelines and profits. 

There are two distinctive stages in this collaborative contract form that takes place between parties such as the designer, contractor and principal:

  1.  The planning stage 
  2. The construction/ delivery stage 

The planning stage 

  • Contractor is involved in:
    • Scoping and finalising aspects such as cost and design 
    • Collaborating with the client to assess and mitigate any issues or risks related to construction or engineering 
    • Creating a guaranteed contract in preparation for stage 2 

The Delivery stage 

  • The delivery of the project commences ie. The construction of the project finally takes place

Benefits of an Early Contractor Involvement (ECI)? 

Early contractor involvements are a great way for increasing the certainty of outcome for clients. This is because the greater collaboration between client and the contractor allows:

  • Clients to become more informed about the project risks and uncertainties  – enabling risks to be identified and subsequently removed
  • Further risks such as the potential risk of litigation to be reduced as there is an increased transparency in relation to costs. This allows contractors to benefit from greater financial certainty. 
  • The time taken for the project to be completed to be accelerated. This is in comparison to traditional construction contracts where time for consideration of alternatives  and finalisation of the design is needed for after the project. 
  • The project to be more cost effective 
  • Responsibility to be shared amongst parties 

Forms of Early Contractor Involvement (ECI) Contracts

There are 3 types of ECI Contracts, and the form that you use will depend on how you prefer to manage the project.

  1. Construction Management (CM)
  • Construction manager manages the construction for the principal and provides preliminaries 
  • Principal hires trade contractors, generally based on the construction manager’s recommendations 
  1. Managing contractor (MC)
  • Trade contractors are chosen and hired by the construction manager 
  • Construction manager is an agent to the principal and holds responsibility for the trade contractors and their acts or omissions 
  1. Guaranteed Maximum Price (GMP)
  • Trade contractors are chosen and hired by the construction manager 
  • Contractor has a fixed budget which they must work around and not exceed

In summary

An ECI form of contract is distinctive from other forms of construction contracts as the contractor acts as an adviser to the principal. In doing so, the principal relies on the contractor’s honest behaviour as an ECI contractor is responsible for overseeing the overall tender process and advising the principal on imperative matters related to budget and costs. Such a collaboration occurs to effectively lead to a successful delivery commencement of a project. 

If you have any further questions about Early Contractor Involvement arrangements, you can get in touch with our construction lawyers for help or call us on 1300 337 997.

About Liv Chum

Liv ChumLiv is one of OpenLegal's paralegals. Liv is a passionate student of the law, with a real interest in the way that business and legal requirements intersect.

About Philip Evangelou

phillipPhil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.