Construction Management Benefits

The construction management process is offered to an Owner as an open-book management system with a fee agreement negotiated at the beginning of the process.

Flexible Fee Arrangement

With a construction management agreement, pre-construction services assist the Owner and design team with budget and cost information that is verified with a high level of accuracy prior to project bidding or the start of actual construction.

Pre-Construction Services

With a construction management agreement, a full service fee structure is offered for the construction phase. There are no hidden costs. The Owner pays the fee as it relates to the overall cost of the work. If savings have been generated through the construction process, that savings is recaptured by the Owner and is not considered a cost to the project. The Construction Manager is paid only the negotiated fee, no secondary fees such as a percentage of savings on the amount left in contingency.

Returned Savings

Changes in the scope of work as the project progresses are similar to other contracting methods. For example, if the scope of the project changes and increases the contract value, then the contract is adjusted upward or lowered if the scope change is a net credit. The difference between how a construction manager handles the changes are, as the project continues and there is a savings, the construction manager returns the savings to the Owner at the end of the project. There is no charge for change order administration.

Scope Changes

General condition costs are developed for the project by the construction manager and are considered to be a line item cost to the project. A construction manager will detail the costs which include supervision, project management time, temporary facilities, temporary utilities, print reproductions, dumpsters, and other related overhead costs. Any portion of the general conditions that are not used during the course of the project are considered a savings to the Owner, and are not retained as additional profit. A general contractor retains the savings as part of their risk profit. 

General Condition Costs

Team Interaction

Construction management services provide a working relationship with the Owner and the design team from the earliest possible start of design. The construction manager becomes involved with virtually all group meetings, gathering information and knowledge to better interact with the design team as it begins to define the project. The construction manager is the owner’s representative at all meetings and on all types of substance.

Lower Overhead

Budget and Schedule Expectations

A construction management firm does not employ labor personnel or equipment which keeps general condition and overhead costs consistently lower than general contractors.

With construction management services, the Owner will be given a budget and a schedule starting as early as the conceptual phase of the project. The budgets will be a reflection of the transcribed description of the project from the design team and Owner to the construction manager. The construction manager will develop a computer-generated schedule that will track all design team responsibilities and deadlines, as well as the projected start date for construction and the work activities that follow in a logical format.

Value Engineering

Competitive Bid Process

Value engineering is often exercised during the project’s design phases as a way of analyzing building components, building systems, and products chosen by the design team. Value engineering assists with developing alternatives in design and product selection to lower budget costs without sacrificing the quality or integrity of the design. A construction manager will work with the design team and Owner and use value engineering as a means for offering the Owner options for substituting materials and methods as alternatives toward achieving maximum value in the building design through construction.

Approval Letters will be presented to the Owner for every contractor being considered for the project. The approval letter process identifies the contractors who submitted proposals for a given scope of work. The construction manager analyzes each bid, chooses the best qualified contractor for that scope of work, and makes a recommendation to the Owner in written format. The Owner has the ability to review the spreadsheet of the bidders and gives the final approval for the contractor selection. This process will endure the very best quality at the most qualified competitive price. On public sector projects, each bidder will be evaluated to determine the “lowest responsible bidder” for each project.

Identifying Cost Expectations

Phased Construction Starts

In the construction management process, the Owner has the ability to identify and include costs for items that may not yet be shown on the project plans. Not looking ahead at a project’s total costs can result in budget overruns at the end of the construction process. It is much easier to justify or reconcile a budget prior to the start of construction  or during the construction process as opposed to the end of the project.

The construction management process gives the Owner flexibility in starting construction. Foundation and site utility construction can proceed prior to the interior or structural components being bid. This saves valuable time on the schedule which translates into an earlier generation of customer revenues. This limits the risk of premium fixed costs of the project were awarded to a single source contractor. The construction manager continues to bid the phased packages competitively, and awards the work to the best qualified bidder through the approval letter process described previously.

Monthly Cost and Progress Updates

Utilization of Local Companies

Each month, the construction manager will review the running costs of the project with the project team. The status of change orders is reviewed, contingencies are evaluated, and construction progress is monitored. The Owner has an ongoing awareness of where their cists are on a month-to-month basis with regard to the schedule. In addition to these services, the monthly payment application is reviewed for approval.

The construction management process gives all firms, large or small, new or established, minority or majority owned an equal opportunity to do business with the Owner. Private sector Owners can honor relationships with specific vendors if such is desired while public sector Owners can insure locally owned firms get an opportunity to compete. The construction manager seeks out potential bidders in order to generate the highest number of independent bidders possible.