Owners Guide to the Design and Construction Process – part 7

The Construction Management Method

Construction management (CM) evolved from government’s attempt to introduce experienced construction personnel throughout its multi-million dollar projects, and to more effectively manage the highly fragmented series of decisions involved in the traditional construction process.

Although this approach has two different variations, the essence of the concept centers around the introduction of a construction manager as the Owner’s agent and manager of the entire building process.

If the construction manager has overall management responsibility, there may be no prime or general contractor on the job.

Using the CM without risk format, each segment of construction is contracted separately with the Owner (not the construction manager) with the advisement of the construction manager. Once the contracts have been awarded, the construction manager works to facilitate on-site communications and coordination.

Prior to construction, the construction manager performs services similar to those the contractor performs in the pre-construction phases of the design/build procedure or the team method.

In the Without Risk Contract, even though the construction manager prepares cost estimates, he does not guarantee costs. He does not assume the contractual responsibilities and corresponding risks of the construction. The risks of the construction execution all belong to the Owner.

A few years ago, another type construction management process – CM “at risk” – evolved from the older construction management concept. This process enables a construction company to manage like a CM but also be responsible to the Owner for the project budget. Usually, the CM “at risk’s” fee is part of the budget and is thereby “at risk” to cost overruns, etc. Using the CM at risk format, the contract and construction process is very similar to the Design/Build methodology.

Today with the design/build, partnering, CM, and CM at risk construction processes available, the Owner needs to be very familiar with the nuances of each contract process and pick the one with which he/she is most comfortable.

Summary of the Construction Management Method

Since the concept of a construction manager is relatively new to East Tennessee and still poorly defined, selecting a company or person to perform CM services presents some special problems for an Owner.

First, there is a need to carefully match the individual or company providing CM services with the Owner’s organization. Many have moved into CM from architecture, real estate, construction, and management consulting. Few are strong in every talent that might be required of a construction manager, and few are experienced with every type of building project.

Second, there is a danger of overkill. Especially on smaller (under $10 million) and less complicated projects, the services of a construction manager may be either redundant or unnecessary. In some cases the cost of this approach may exceed the benefits.

However, in situations where traditional bidding procedure is required by government regulation, the construction management approach can ease many of the difficulties.

SUMMARY

Four Basic Approaches to the Design and Construction Process

Process

Advantages

Disadvantages

Traditional

  • Lowest competitive bid for given set of plans and specs
  • More control over Contractor
  • Budget over-runs
  • Alternative solutions not cost tested
  • Adversarial Owner-Contractor relationship

Design-Build

  • Realistic initial budgets and cost control
  • Cost evaluation of alternatives
  • Lowest cost solutions to Owner requirements
  • Single-source responsibility
  • Earlier start and sooner completion
  • Less control by Architect

Partnering

  • Realistic initial budgets and cost control
  • Realistic initial budgets and cost control
  • Earlier start and sooner completion
  • Segregated responsibilities between design and construction
Construction Management (Not at Risk)
  • Construction  and cost consultation during design
  • Owner assumes construction risk
  • Additional consultation fee costs, with possible redundancy