Now that we have reviewed the necessary steps for a successful solicitation process for a design professional, we will focus on the role a construction manager may play and offer suggestions on how to identify whether or not you should engage a construction manager for your project.
First, it is important to note that the terms “Construction Manager” and “CM” are used in the construction industry to refer to both a project management system and a project delivery system.
As regards a CM as a project manager, the CM acts as an advisor to the owner and is not responsible to the owner for the actual construction of the project or compliance with the project schedule. A CM in such an advisory capacity is often referred to in the industry as a “CM Agency” or “CM Advisor”. In the role of CM Agency, the CM is the owner’s agent for the administration and overall management of the project and is generally involved in the project from beginning to end. As the agent of the owner, the construction manager is granted a specified level of authority to act for the owner and has a fiduciary duty to act in the best interest of the owner. A “CM Advisor” also counsels the owner as regards the project, but may not be involved in all phases of the project. For instance, you might engage a CM Advisor to assist in the construction phase of the project to supplement the skills and capacity of your internal project team for administration of the project. The CM Advisor often has a more limited role and less decision making authority than a CM Agent. In either case, the CM is usually compensated on a lump sum basis based on a particular period of time for completion of the project or the CM’s participation in the project. To the extent that such period of time is exceeded, the CM is usually compensated at a contracted hourly rate for its additional services.
A CM that is responsible for the delivery of the project is referred to as a Construction Manager at Risk (“CM at Risk”) because the CM is not only engaged by the owner to perform advisory services but is also responsible for the timely completion of the construction of the project. The CM at Risk generally advises the owner and the architect during the design phase (generally referred to as preconstruction services) by performing cost estimating, value engineering and other services. At the point where the design documents are sufficiently complete so that the CM at Risk can bid the project, the CM at Risk will procure and contract with subcontractors, suppliers and consultants as necessary to construct the project. It is not unusual for a CM at Risk to be compensated for construction phase services on the basis of an agreed guaranteed maximum price.
As we discussed in a previous post, determining the appropriate method for the management of your project is largely based on a thoughtful assessment of the skill, experience and capacity of your staff and your building committee, as well as the overall complexity of, and schedule for, the project. If you conclude that your staff and building committee are not likely to be capable of managing and administering the project, a CM in an advisory role may play a valuable role in helping you to achieve the completion of the project within budget and on schedule. We will discuss considerations for determining the best project delivery method for your project in a future Construction Corner post.