Construction Management: Misunderstood or just Overlooked?
Construction Management, a very old
but untapped service that can save time, frustration and help control
building costs.
Usually there are three parts of a building team, the General Contractor,
the Architect/Engineer, and the Owner.
Another part of the building team that seems to be overlooked by
the Home Owner and Small Business Owner is the "Construction
Manager". Construction Management is "A special management
service performed for the purpose of coordination and accomplishment
of project planning, design and construction".
The Construction Manager is usually under special agreement with
the owner. However, construction management services are sometimes
offered by architects under separate and special agreements. Construction
Management is not part of the architect's and engineer's basis services,
but is an additional service sometimes included in their comprehensive
services.
Construction Management is often practiced on extremely large building
projects. One of the reasons construction management is used on
larger projects is to permit the construction process to start while
the design is still progressing which allows the construction manager
to recommend construction options for better project and cost control
and to allow the building project to be phased over a period of
time.
These same construction management techniques are also available
to home owners and small business owners for smaller projects. Construction
Management gives the owner the opportunity to act as owner builder
(where the owner obtains his own building permit) instead of contracting
with a General Contractor. The professional Construction Manager
can assist the owner in obtaining bids from licensed and properly
insured subcontractors and materialmen. The owner signs separate
contracts for the construction of the various portions of the project
thus saving the General Contractors markup on the separate contract
prices. These savings can be substantial on the average project.
The trade off, however, is that the owner signs separate contracts
instead of having a single contract with a General Contractor. The
separate contracts are often broken into the following phases:
- General Construction
- Plumbing
- Heating (Ventilating, Air Conditioning)
- Electrical
- Sewage Disposal (if applicable)
- Elevators (if applicable)
- Specialties
- Other
The Construction Manager will then assist the owner in overseeing
and supervising the building project based on a predetermined scope
of services and written agreement between the Construction Manager
and property owner.
The construction manager usually works on a fee based on a percentage
of the total construction costs of the project. Also, the Construction
Manager is usually reimbursed for his direct out of pocket expenses
such as telephone, photocopies, special travel related expenses,
and for his direct salary expenses for any on-site staff the Construction
Manager employs.
Construction Management fee generally ranges from 2% to 10% per
cent of the construction costs. eg., subcontractors, materials,
supplies, equipment costs, and possibly permit fees plus the Construction
Manager's "reimbursable expenses" and "General Conditions"
which are usually billed to the owner at cost. Usually, the larger
the project the smaller the overall fee percentage. Some construction
management firms work on a negotiated hourly rate or a predetermined
fixed fee.
The home owner, business owner, or developer not equipped or interested
in managing their own building project could benefit greatly from
the services of a Construction Manager.
The most common ways of using an experienced Construction Manager
are:
- When the Construction Manager acts as the direct agent for the
Owner but the owner still assumes total financial responsibility
for the project. Here the owner maintains direct communication with
the Architect, General Contractor, and Construction Manager.
- When the Construction Manager assumes the total financial responsibility
for the project. Here the owner maintains direct communication with
the Construction Manager only. The construction manager communicates
with the Architect, General Contractor, and Subcontractors.
- When a joint venture is formed between the Architect, Contractor
and the Construction Manager. Here the owner maintains direct communication
with the Joint Venture entity. The joint venture communicates with
the Subcontractors.
- When the Construction Manager acts as a consultant to the owner
and responds to the owners requests for assistance on building related
matters. Here the owner maintains direct communication with the
Construction Manager, Architect, General Contractor and/or Subcontractors.
Construction Management Companies are listed in the Yellow pages
of your telephone directory under the heading of "Construction
Management". Some General Contracting firms have the capability
of performing construction management services.
When selecting a Construction Manager or Construction Management
firm request a written Construction Management proposal. The proposal
may include all or some of the following depending on the size and
complexity of your building project:
- Master Planning services, which would include project Budget Information
and Scheduling.
- Construction Management Services, which would include Systems and
Procedures, Cost Management, Time Management, General Consulting,
Affirmative Action and Community Relations, and On-Site Management.
Some advantages of using a construction manager are:
- Knowledge and payment of actual costs;
- Direct control of Subcontractors and Materialmen;
- Direct control of schedule;
- Ability to negotiate directly with Subcontractors if changes in
the work are authorized or if unforeseen conditions are discovered;
- Minimize the threat of liens by paying subcontractors and materialmen
directly;
- Having the option of using a General Contractor or doing the project
as "Owner/Builder".
- Knowledge of Owners and Contractors rights and obligations during
the building process and proper transferring of risk.
By W.
Gary Westernoff, Founder and CEO of Constructionplace.com, Inc. Moraga, CA.
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