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Construction Manager vs. General Contractor - Deciding the Best Approach

Construction Manager vs. General Contractor – Deciding the Best Approach

When undertaking a construction project, a significant decision revolves around selecting the appropriate delivery model – the construction manager or general contractor. This choice significantly shapes every aspect of the project, influencing the budget, schedule, and ultimately, the quality of the finished product. 

The conventional route often involves engaging a general contractor within the framework of a design-bid-build model. However, is this the optimal choice? Determining whether to opt for a general contractor or construction management necessitates careful consideration. 

In most scenarios, a definitive answer emerges. The key lies in where you position your builder, dictating the preferred “side of the table” for your project’s success. 

What defines a general contractor? 

Typically engaged post the finalization of a design, a general contractor plays a pivotal role. The owner initiates a project bidding process among general contractors, ultimately selecting the most cost-effective bidder. This approach aligns with the customary practices of procurement departments and project delivery teams.

What does construction management entail? 

In contrast to general contractors, construction management services enter into a contract with the owner at a predetermined fee. This fee serves as a substitute for the lump sum typically charged by a general contractor to cover their overhead and profit. The project manager takes the initiative to develop plans and acquire necessary resources through a collaborative and open-book approach. Costs are transparently and competitively accrued, and upon project completion, the owner pays solely for those costs along with the construction manager’s fee. 

Furthermore, construction managers are engaged earlier in the project lifecycle, often before the finalization of the design or a detailed cost estimation. This early involvement allows for a more proactive and informed approach to project management. 

General Contractor vs Construction Manager 

In the evaluation of construction approaches, the decision between a general contractor vs construction manager warrants consideration. 

When opting for a general contractor in a lump sum or fixed-price arrangement, their motivation is naturally geared towards safeguarding or elevating their profit margin. Any opportunities for savings, even if suboptimal for the client, translate into gains for the contractor. This misalignment of interests positions the general contractor on a distinct side of the table from the owner. 

Conversely, a construction manager operates under a fixed fee, functioning as an extension of the owner’s staff. Their vested interest lies in not only meeting but surpassing the owner’s objectives regarding schedule, budget, and construction quality. This alignment places the construction manager and the owner harmoniously on the same side of the table. 

Construction Management Keeps You on Budget 

Construction management proves advantageous for owners in several ways, particularly in enhancing budget efficiency. Employing a construction manager early in the project, during the design phase, is beneficial. Owners often opt for a “two-stage” or “progressive contracting” model, agreeing on costs during pre-construction while deferring final costs until the project is more defined. 

This approach minimizes risk and cost for the owner, ensuring work commencement without waiting for the entire project to be fully designed. The construction manager, during pre-construction, strategically divides the work to engage the best subcontractors, utilizing their expertise and connections to the owner’s advantage. This involves reaching out to specialized subcontractors, seeking competitive pricing for smaller packages, and actively involving the owner in the final budget decisions. 

Contrastingly, relying on a general contractor after finalizing designs overlooks the industry expertise a construction manager brings. In the traditional delivery model, waiting until after designs are finalized may lead to challenging relationships among project teams, resulting in conflicting goals and behaviors. 

Integrating a construction manager during the design phase not only saves time and money but also reduces the risk of design rework after finalization. In a conventional design-bid-build scenario, market feedback often surfaces only after the project is fully designed, necessitating costly redesigns and causing delays in project completion. 

Timeliness 

Enhancing your project timeline is a key benefit of engaging a construction manager. By involving them early on, you can align procurement and construction with the design phase, optimizing efficiency. 

Addressing crucial queries upfront, such as releasing design packages strategically, determining the timing for permit, foundation, and civil drawings, and scheduling orders for long-lead equipment, allows for a well-planned and efficient project timeline. This proactive approach underscores the significance of time as a valuable resource in the construction process. 

Enhanced Quality 

Construction management goes beyond procuring materials; it covers diverse industry knowledge and networks. Unlike merely inputting figures, a construction manager adopts a holistic view, yielding superior project outcomes. By optimizing budget and schedule, a construction manager creates opportunities for enhancing the entire project, making previously unthinkable upgrades feasible. 

The Final Verdict 

When deciding between construction management and a general contractor, the preference often becomes evident. Opting for a construction manager aligns interests towards maximizing value and achieving project goals, ensuring collaboration at the same table. 

Supporting this decision are various industry analyses by respected organizations, such as the Lean Construction Institute (LCI), Construction Industry Institute (CII), Design-Build Institute of America (DBIA), and the Associated General Contractors of America (AGC). DBIA’s study revealed that 76% of owners reported a very good or excellent experience with design-build project execution. Additionally, involving a construction team early in the process, as recommended by studies, yields superior outcomes compared to traditional approaches. 

FAQs 

What factors should I consider when deciding between a general contractor and a construction manager for my project? 

Understanding the distinctions between a general contractor and a construction manager is crucial. Factors like project complexity, timelines, and your preferred level of involvement can significantly influence your decision. 

How does the role of a general contractor differ from that of a construction manager in a construction project? 

Explore the specific responsibilities and roles that a general contractor and a construction manager play. This FAQ aims to provide a clear understanding of their functions and help you make an informed choice for your project. 

Are there any industry trends or best practices that indicate whether a general contractor or a construction manager is more suitable for certain types of projects? 

Stay informed about industry insights and trends regarding construction delivery models. Knowing how general contractors and construction managers align with different project types can guide you in making the right decision tailored to your specific needs.

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