Virtually all our clients insist on Construction Management (CM) and their scope spans 115 cities, 13 states, and 3 continents. Why is Construction Management so popular?
The historic design-then bid-then build approach had the problem of setting up adversarial relationships between the Owner and general contractor. The Owner’s financial motivation was to squeeze the contractor while the contractor’s financial motivation was to cut quality to increase profits. The engineer’s financial motivation was to deliver an expensive building to keep his fee high. The Architect, who knew the most about the project, was relegated to bystander during construction. CM, and design-build, mitigate these issues. CM emerged after WWII and steadily grew until it exploded in the 70's. The Federal Government passed the Federal Acquisitions Reform Act so they could also take advantage of the benefits. The USDoT studied the benefits and, with a sample of 330 buildings, found an average of 13% cost reduction and 30% time savings. Similar studies found up to 18% cost reduction and 60% time savings.
Here is how CM saves time and money while preserving quality:
Faster project completion:
CM projects are typically completed faster because bid time can overlap other activities, scheduling for the project can begin before design is finalized, and potential construction problems are uncovered early. Material and equipment procurement and construction work can begin before the construction documents are fully completed. The resulting time savings translates into lower costs and earlier utilization of the completed facility. Because the project is bid to specific trades, rather than to general contractors, we can start some trades before design work is completed for other trades. For example, we don’t have to wait on cabinet details or door schedules before we start constructing site utilities, general conditions, or foundation work.
CM eliminates several layers of contractor overhead and profit. The general contractor is eliminated along with his mark up on individual trades (up to 25%) and his related contingencies are also eliminated. Each Trade Contractor is a prime contractor and directly managed by the CM. CM allows direct purchase of materials and equipment for significant additional savings. For example, in a design-bid-build delivery, the electrical contractor buys fixtures, marks them up about 25% to the general contractor who marks them up again to the Owner. With CM, we buy directly from manufacturer’s national distributor and, in some cases, directly from the manufacturer. Thus, securing the best purchase price and eliminating wasteful markups. With our CM, nothing is marked up to the Owner.
Single source of accountability:
The CM approach provides a single source for your entire project. In the classic design-bid-build method, the owner must select an architect, finalize the design, bid the project, select a general contractor, and then act as an intermediary. The CM method is the express lane. It fosters teamwork and lends itself to cooperation. The relationship built during the design phase helps ensure that the stage is set for a successful construction phase. A single source is held accountable for cost, schedule and performance. The design team is on board throughout construction and delivery so construction benefits from the most knowledgeable people.
Discussing budget during the design phase (not waiting until the bids come in) helps keep the project within a realistic budget. Communicating the cost implications of design decisions ensures that the owner plays a key role in arriving at the final project price. Once the scope of work has been finalized, the project costs are clearly defined and controlled by the CM.
The CM method helps remove ambiguity that may arise in material and construction specifications. Since the Architect, Engineer, and CM are from the same organization, the focus remains on protecting the client’s interest. The singular responsibility inherent in CM serves as a motivation for quality and proper project performance. The Owner’s requirements and expectations are documented in performance terms and it is the CM’s responsibility to produce results accordingly.
CM meets performance needs, not minimum design requirements, often developing innovations to deliver a better project than initially imagined. Quality is improved through greater focus on quality control and quality assurance through continuous involvement by the design team throughout project development and innovations can be uniquely fashioned by project needs and contractor capabilities.
Decreased Administrative Burden:
Owners can focus on running their business rather than managing disparate contracts. The owner is not required to invest time and money in coordinating and arbitrating separate design and construction contacts, but rather is able to focus on timely decision making.