What is the Construction Management Project Delivery Method and how does it differ from the General Contracting Project Delivery Method? That's a great question! Here is an analysis of the two models.

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General Contractor (GC):

 

Multiple General Contractors (GC) submit fixed costs bids to the Architect and Owner based on issued drawings/documents and site walkthroughs.  The GC may ask the Architect questions, but essentially the bid is based on their own interpretations of the drawings/documents. The GC's numbers are either based on experience or on pricing from Subcontractors.  The Owner and Architect review the bids together and the contract is awarded based on pricing, the GC's reputation, and scheduling.  During construction, work is completed by the GC's crews or Subcontractors selected by the GC.  Payment to the GC may be specifically scheduled for when critical milestones are completed or may be billed monthly based on a percentage of construction completed on the day of billing.

 

Pros:

• You know exactly how much the project will cost at the beginning of the project, based on the information contained within the Architect’s plans/drawings.

• When there are increases in material or labor costs, the GC must pay for the price difference.

• There is only one contract for the Owner to sign and minimal paperwork is involved with billing.

 

Cons:

• The relationship between the GC and Owner-Architect is inherently adversarial. The GC’s prime motivation is to deliver the project as inexpensively as possible, whereas the Client and Architect are driven by quality, cost, and time.

• A GC is not always transparent on profit centers for them on your project.

• If materials and/or labor decrease in cost, that is additional profit for the GC.

• Payment is made directly to the GC so the Owner is not aware if the Subcontractors are getting paid, which can expose the Owner to potential liens of the property, for non-payment, as well as schedule delays.

• GC's will use their own Subcontractors, and often these are in-house Contractors.  If forced to use another Contractor per the Owner’s or Architect’s request, there can often be coordination issues and related cost increases.

 

Construction Management (CM):

 

Multiple Construction Managers (CM) submit cost-plus bids to the Architect and Owner based on issued drawings/documents and site walkthroughs.  The CM's numbers are based on experience with similar projects in scope, internal estimates/takeoffs, and on pricing from other trades Contractors.  The Owner and Architect review the proposals together and the contract is awarded based on the pricing, the CM's reputation, and scheduling.  During construction, the CM bids each trade/material out to multiple Contractors/Suppliers.  Bids for each trade/material are reviewed with the Owner and Architect.  Contracts for each trade/material are awarded based on pricing, the Contractor's/Product's reputation, and scheduling.  Payments are made monthly based on orders placed and labor completed to date.  Payment is made directly to contractors and suppliers with Lien Waivers signed as proof of each Contractor receiving their payment.

 

Pros:

• Each Material and Contractor are reviewed with the Owner and Architect, so the reputation and quality of each is considered.

• When there are decreases in material or labor costs, the savings are passed on to the Owner.

• The Owner goes into contract directly with the Contractors, eliminating a conflict of interest between CM and Contractor.  This allows the CM to essentially act as the Owner's Rep.

• All invoices are submitted to the Owner and checks are written directly to each Contractor so there is transparency of cash flow, eliminating the risk of liens.

• Changes during construction will still result in a change order, but the materials and labor can be competitively priced.

• If the Owner has a Contractor or Supplier that is preferred, the CM model allows the Owner or Architect to easily utilize their services.

• CM has the flexibility to perform design-build and fast track projects.

• There is a Complete transparency of profit % for the CM, as well as the related Construction Supervision.  This may be adjusted based on size of project.

 

Cons:

• When there are increases in material or labor costs during construction, the Owner must pay the price for the difference.

• The Owner signs Contracts with all Contractors inherently creating more paperwork. The CM fully manages the contract writing and contract administration on the Owner’s behalf.

• Because the owner signs contracts with each Contractor, the invoicing paperwork to review for billing can be extensive. The CM consolidates, reviews, pre-approves, prepares, and submits all invoices to the Owner for payments.