The Role of a Construction Manager

Over the last twenty years or so, the construction delivery process has changed. No longer a simple design and bidding process, most institutions select a complete project delivery team at the outset of a project. This team typically consists of an owner’s project manager, an architect, and a construction manager.

What is the Role of the Construction Manager?

The Construction Manager is an integral part of the team.  Unlike a contractor who bids on the entire project, the Construction Manager acts as a professional on the team, and on a fee basis, advises on cost and constructability, and acts on behalf of the owner to bid and buy out the various parts of the project.  Unlike a general contractor, the Construction Manager uses an “open book” process to share all of the sub-bids with the owner and assists in de-scoping and selecting the lowest qualified bid in each category.  The bidding and negotiating process results in a Guaranteed Maximum Price for the entire project.

What is a Guaranteed Maximum Price?

A Guaranteed Maximum Price (GMP) is a contract price worked somewhere in the design or bidding and negotiation phase, that establishes the total cost for the project.  The Construction Manager agrees to deliver the project for that total cost, barring any unforeseen conditions or subsequent changes by the owner.

What are the advantages of a GMP over a General Bid?

Cost and Risk Management

Bidding is no guarantee that a project will come in within the budget.  If all of the bids come in over budget, that project is forced to go “back to the drawing board” to find ways to reduce cost before re-bidding.  Also, it is common that the lower the bid, the more change orders one can expect during the process.  With a GMP, the costs are known before the start of construction.

Timing and Schedule

A GMP can be negotiated during the design phase.  This means that construction can be mobilized more quickly, and some parts of the project (e.g. utility work or demolition) may begin before the full construction phase has begun.  Where time is money, this can result in considerable cost savings to a project.

Quality Control

With the Construction Manager involved in the design and specification part of the project, the specified quality and means and methods of construction are known to al in advance.  This avoids the inevitable substitution process associated with bidding where

Are there any Disadvantages to a Guaranteed Maximum Price?

Yes, just as in any process there are risks associated with the GMP process.  One is cost, as the Construction Manager’s fee is sometimes perceived as an added cost.  In the right circumstances, this cost is outweighed by the risk management that such a service provides.  The other is that as the design of a project evolves it may be that the Construction Manager chosen for the project is not the right one (e.g. too big, not experienced in renovation, etc.).  The key to this is choosing the right team in the beginning, based on experience and qualifications, and managing the team properly throughout the process.