General Contracting vs Construction Mgmt – What’s the Difference?

Generally speaking, most people are confused about the difference between a GC and a CM. Usually the two names are used interchangeably. Not a big deal until you decide you need the services of one or both. Then an explanation is essential.To illustrate the difference, let’s pretend I am an Owner who needs to build a large shopping mall (I am female, so shopping is always on the mind). Unlike some other people I know who have built some wonderful projects, I have absolutely no expertise in any aspect of construction. So, while it is helpful to know the general process, I still am not sure how to begin. And I want this mall to be my legacy – it needs to be built right! I want the costs to be within my budget, I want it built on time, and most of all I want the highest level of quality. Although some outstanding architects have been recommended to me, I am still not confident I can move forward, so I talked to a couple of owners who have built projects. One owner suggests I speak to a construction manager.Of course, I don’t have any idea what a construction manager does for a project. While I have heard the term, I have always assumed a construction manager is just another name for a general contractor. When I meet with a representative from the CM, she seemed to anticipate this – and began our conversation with a rough drawing of each of the members of a construction team – the owner, the architect (or designer) and the general contractor.

She added the construction manager as a fourth member of this team in the project – a team member with resources and expertise in construction that I do not have. In fact, she suggested that a CM could already be involved in my project, in the early planning stages, providing me with independent advice and expertise from the beginning to the completion of my new shopping mall (see the attached timeline). She showed me the resumes of the CM team that would be assigned to me – personnel with expertise in planning, design, construction, scheduling and overall project management and control. In short, she tells me that as my construction manager, or CM, her firm will provide comprehensive management of the project, including time, cost and quality, from beginning to end.

 

Roles of Construction Managers

As it begins to sink in, she tells me that a construction manager, or CM as they are usually called, may have different roles (Agency CM or CM at Risk), depending upon the project and the owner.

Agency CM – In many instances, the CM role is to be an independent professional adviser to the owner on all parts of the project, managing the project on behalf of the owner from conception to completion. This role is usually called “Agency CM” (or “CM Advisor” by the American Institute of Architects) and does generally suggest the CM is acting solely in the interests of the owner and the CM’s judgment is not influenced by any monetary interest in labor or materials used in the project. However, she makes it clear that if I engage them as an “Agency CM,” I still need to hire an architect to design and a contractor to build my shopping mall because the “Agency CM” is not performing any design or construction – just overseeing the project. Payment for this CM role is usually on a fee basis.

CM at Risk – This expands the role of the CM to not only providing professional advice to general contractor – including engaging subcontractors – for the purposes of completing the construction of the project. This role is usually called “CM at Risk” (or “CM Constructor” by the American Institute of Architects) as the CM has assumed the responsibilities of delivering the project at a guaranteed maximum price and thus the “risk” of completing the project on time and at a maximum price is now with the CM. So now the CM is acting as the Contractor as well as the CM.

 

Conclusion

What becomes apparent to me is that a CM plays a very different role when compared to a typical general contractor. In fact, the Agency CM does not perform any construction; the CM at Risk does act as the contractor, but is involved in the early stages of construction, including planning and design.

Contrast this to a general contractor in the “traditional” design- bid-build delivery system that is not involved until the planning and design phase are generally complete – the general contractor first learns of the details of the project in a request for proposal and specifications sent out by the owner.

A CM may have the expertise to perform the following functions on behalf of the owner:

  • Assist in project scope
  • Assist in land acquisition
  • Assist in permitting
  • Assist in financing the project
  • Cash flow management
  • Cost estimating
  • Cost and schedule control
  • Contract administration
  • Document control
  • Construction inspection
  • Quality control
  • Value engineering
  • Risk management
  • Constructability review
  • Contracting and project delivery systems
  • Dispute avoidance and resolution

 

Possibly more importantly, the CM provides a specialized level of knowledge, experience and expertise that most owners do not have, particularly for complex construction projects that require a wide array of skills to successfully manage to completion. The CM adds value by providing the resources and expertise needed to manage quality, cost, schedule, scope and risks associated with design and construction to help the Owner achieve its objectives.

 

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