For developers procuring a main contractor
Pre-Construction Services Agreement (PCSA): A Developer's Guide
Sviatoslav JerdetchiiCEO & Founder of Craftex. Updated , 5 min read
The short answer
A pre-construction services agreement (PCSA) pays a main contractor to help develop the design, programme and price before the building contract is signed. It is the first stage of a two-stage tender.
- You fix overheads, profit and the basis of preliminaries in stage one.
- The services schedule should list named outputs with dates, not general advice.
- You should keep a licence to use the work product and be free not to proceed.
- It pays off on schemes with real risk: basements, retained façades, tight sites.
On most London schemes the builder's knowledge arrives too late. The design is finished, the tenders come back high, and the savings now mean redesign.
A pre-construction services agreement fixes the timing. You buy the contractor's input while it can still change the scheme, instead of paying for it later in variations and delay. Have a scheme in design? Book a site visit and we will tell you whether a two-stage route fits it.
How a pre-construction services agreement fits a two-stage tender
A single-stage tender asks contractors to price a finished design. That works when the design really is finished. On most London schemes it isn't. Basements, party walls, façade retention, utilities and approvals all carry unknowns that only a builder will price honestly.
Two-stage procurement splits the job.
| Stage one (PCSA) | Stage two (building contract) | |
|---|---|---|
| What is agreed | Overheads and profit, preliminaries or their basis, the PCSA fee, the route to a contract sum | The full contract sum, programme and risk allocation |
| Contract | A PCSA (JCT publishes a standard form) or a bespoke agreement | A building contract, often design and build |
| Design status | Being developed towards technical design | Complete enough to price, with defined contractor's design portions |
| How the price is built | Open book: packages tendered with you and your cost consultant | Agreed from the stage one tenders |
| Your exit | You can usually stop and pay only the PCSA fee | Committed to build |
The JCT publishes a Pre-Construction Services Agreement for exactly this, now in a 2024 edition. Many developers amend it heavily or write their own. Either way, the same few clauses decide whether it protects you.
What a pre-construction services agreement should deliver
The services schedule is the heart of the agreement. If it says "provide pre-construction advice", you have bought nothing you can enforce. Ask for named outputs, with dates.
A useful schedule for a London residential or mixed-use scheme usually includes:
- Buildability reviews. Written comments on the architect's and engineer's drawings at agreed stages.
- A construction programme. From start on site to completion, with the logistics plan behind it: crane, hoist, deliveries, road closures.
- A cost plan the contractor stands behind. Updated at each design stage and reconciled with your own consultant's numbers.
- Package tenders run open book. Shortlist, tender documents, returns and a recommendation for each package.
- Surveys and investigations. Ground, utilities, asbestos, opening-up and condition surveys of neighbouring buildings.
- A risk register. With owners, costs and the decision each risk needs.
- Input to approvals. Building control, the fire strategy, party wall notices, highways licences and the construction logistics plan.
- A stage two proposal. The contract sum, programme, clarifications and exclusions.
That list is longer than many contractors offer. It is also what turns a PCSA from goodwill into a priced plan.
The terms that matter most
The fee and how it is earned
PCSA fees are paid as a lump sum, monthly or against milestones. Milestones tied to outputs keep both sides honest: programme issued, packages tendered, proposal submitted. Agree whether the fee is credited against the contract sum if stage two goes ahead.
Overheads, profit and preliminaries
These are the numbers you buy certainty on in stage one. Fix the overheads and profit percentage. Fix the preliminaries as a schedule of items with rates, not one line. Then a longer programme at stage two can be checked line by line.
Design responsibility
Under a PCSA the contractor comments on design. It should not quietly become responsible for design it never produced. If it does produce design, say so in the agreement. Temporary works, a basement sequence or a cladding package are examples. Add the standard of care and the professional indemnity cover that go with it.
Who owns the work product
You need a licence to use everything the contractor produces, whether or not you proceed. Programmes, surveys, logistics plans and tender documents all count. Without it, walking away at stage two means starting again.
Exit and no obligation to proceed
The agreement should say you are not obliged to award stage two, and what you pay if you stop. It should also deal with drift. Set a long-stop date, after which either side can end the agreement.
Early works
Demolition, enabling works or a basement dig sometimes need to start before the price is fixed. That is a separate instruction with its own price and scope. It never "just starts" under the PCSA.
I’m really pleased with my experience working with Craftex. As a commercial construction firm, they handled everything from start to finish without any unnecessary stress on my side. What impressed me was how they suggested practical ideas that improved the design while also keeping things realistic. The communication was always clear, so I never felt out of the loop. The project ran smoothly, deadlines were met, and the end result is exactly what I was hoping for — a space that feels both functional and modern. It’s not easy finding contractors who are this reliable, but Craftex definitely proved they can be trusted.
A PCSA or a letter of intent
Letters of intent get people moving before a contract is signed. They are a different tool.
| PCSA | Letter of intent | |
|---|---|---|
| Purpose | Pays for advice, programme and pricing | Authorises limited works or orders while a contract is agreed |
| Scope | Defined services schedule | Defined works, usually capped by value or time |
| Typical risk | Weak schedule, unclear design liability | Works run on with no contract and no cap |
| Use it when | You want a contractor's input during design | A long-lead item or early works can't wait |
The common failure is a letter of intent that runs for months past its cap. Both sides then argue about what was agreed. If the contractor will do real work before the contract, a PCSA plus a separately priced early works instruction is cleaner.
When a pre-construction services agreement is worth it
Worth it when the scheme has real construction risk. Think basements, retained façades, tight urban sites and occupied neighbours. Conversions of existing buildings qualify too, where nobody knows what is behind the plaster. So do higher-risk residential buildings that need the Building Safety Regulator's approval before work starts.
Less useful when the design is complete, the building is simple and plenty of contractors will price it in one stage.
We saw why early builder input matters on Slingsby Place in Covent Garden. The building was taken back to its shell behind retained façades. A tower crane stood inside the footprint, with neighbours on every side. The works were led by Martin Hickey, now our Preconstruction Director, as Project Director.
The temporary works design for the façade retention was signed off before demolition. Decisions like that only get made in time when a contractor is at the table during design.
How we work before the build contract
Earlier questions come first: whether a site works, what it could hold and how long it could take. Those sit in a development feasibility and site appraisal.
Because design and construction sit under one roof, the team that prices the scheme is the team that builds it. On a design and build route, that closes the gap between what was drawn and what was priced. Already have a design team? Our construction project management service can run the two-stage process on your side.
For the bigger picture, read our construction project planning guide. Taller residential schemes should also read our guide to Gateway 2 and the second staircase rule. It explains the approval periods to build into the stage one programme. Ready to test the route? Book a site visit and bring the drawings.
Before you sign a PCSA
- The services schedule lists outputs and dates, not general advice.
- Overheads and profit are fixed as percentages; preliminaries are itemised.
- The fee basis, payment triggers and any credit against stage two are written down.
- Design responsibility is clear, with PI cover where the contractor designs.
- You have a licence to use all work product if you don't proceed.
- There is no obligation to award stage two, and there is a long-stop date.
- Open-book package tendering is described: who sees the returns and how they compare.
- Early works, if any, are instructed separately with their own price.
