USE OF CONSTRUCTION MANAGEMENT
One of the compelling reasons for engaging a CM is the owner's lack of in-house resources of managing and administering significant construction projects. An experienced CM can assist the owner in the early pre-construction phase to evaluate the feasibility of certain construction practices, select early delivery systems, prepare cost estimates, evaluate potential sites, select design professionals and consultants, and assist with the project financing , including efforts to move the project through any approval process.
During the design phase, the CM's experience can continue to assist the owner in developing the project. The CM's coordination and input into the design process, including budgeting, scheduling, cost estimating, design review, and value-engineering can all help in preparing bidding documents that accurately and economically reflect the needs of the owner.
If, in turn, the CM is also retained during the construction phase, then there is job continuity and job experience, which can also prove invaluable. The CM will coordinate its efforts with the design professional and often relieve the designer of the scheduling, estimating, and administrative responsibilities, which would otherwise fall within the designer's scope of services if the CM was not engaged.
PRE-CONSTRUCTION PHASE DUTIES OF THE CONSTRUCTION MANAGER
The duties of the CM normally fall within two distinct phases - pre-construction and construction. During the pre-construction phase, while the design is being prepared and necessary approvals are being obtained, the CM will usually perform any or all of the following functions:
Furthering the development of owner's project needs or programs through discussions with the owner, designer, and consultants;
Preparing preliminary budget estimates and updates as necessary;
Analyzing the constructability of the preliminary design;
Generating a preliminary schedule;
Proposing and evaluating value-engineering solutions to develop alternate designs and material selections to achieve economies of time and money;
Assisting the owner with bidding of trade contracts including developing bidder interests, reviewing submitted bids, and making recommendations regarding bids to the owner;
Providing general project administration on behalf of the owner;
Assisting owner in obtaining necessary permits and approval from applicable regulatory and governing authorities;
Advising the owner of the need for, and potential cost of, additional consultants;
Coordinating the ordering of long lead time equipment and materials.
CONSTRUCTION PHASE DUTIES OF THE CONSTRUCTION MANAGER
During the construction phase, the CM is responsible for the administration and management of the separate trade contracts. In such a role, depending on the contractual relationship between the owner and the CM, the CM may be held responsible for the performance of individual trade contractors and may guarantee performance within a specific guaranteed maximum price. Construction phase duties of the CM may include any or all of the following:
Continued work with designers to consider value-engineering proposals and requests for substitutions and alternates by the trade contractors;
Administration of individual trade contracts;
Processing application for payment from trade contractors and consultants in conjunction with the design professional;
Updating the project schedule;
Reviewing, updating and comparing costs of construction with project budget;
Consulting with the owner with respect to any claims, requests for changes, or disputes;
Managing on-site quality control inspections;
Reviewing trade contractors' safety programs and their implementation;
Coordination with design professional with respect to design intent, technical matter and contract interpretations;
Recording site activity;
Attending meetings with owner as technical advisor;
Coordinating with design professional regarding substantial and final completion inspections; and
Receiving, assembling, and reviewing project completion documentation including warranties, as-built drawings, operation and maintenance manuals, waivers and releases, and insurance policies.
CM/Agent
Generally, the pre-construction phase service of the CM/Agent are performed either on a lump sum basis for smaller and less complicated projects, or on a cost reimbursement basis using personnel and material unit rates agreed in advance with or without an additional fee for more complex projects. In some instances, lump sum fee plus reimbursable expenses may be the agreed upon basis. The percentage of the CM's fee will, of course, vary with the risks involved with a particular project.
Where it is necessary to pay on a cost-plus basis, agreed unit rates and a "not to exceed" cap may be desirable. While a "cap" may not be an absolute guarantee, it may serve as a point at which the CM will be obligated to provide notice so that the parties can discuss what future costs are expected to be.
During the construction phase, while compensation arrangements can again vary, it is reasonable to expect that the CM/Agent will perform its services for a combination of a fee as considered for its profit and overhead, coupled with reimbursement of certain prescribed costs. The CM arrangement should carefully define what expenses will be considered reimbursable. Typical categories of reimbursable expenses include:
Salaries of the CM's employees working on the project, other than principals;
General conditions costs for the use of the project (i.e., water, sanitary facilities, first aid, rubbish removal, winter protection):
Document reproductions;
Long distance calls;
Travel and sustenance when traveling beyond a reasonable distance from the CM's office;
Office Supplies
One year warranty expenses.