GENERAL CONTRACTING VS. CONSTRUCTION MANAGEMENT
When you begin your next construction project, you may find yourself asking, ‘What is the difference between a general contractor (GC) and a construction manager (CM)?’ Although GCs and CMs are both considered the primary contractors on a construction job, there are fundamental differences between these two roles. Let’s walk through some of the benefits and disadvantages related to each position.
A general contractor is responsible for the day-to-day management and coordination of a construction project. The client typically hires on gCs through a bidding process that integrates the advice from the client’s consultants, namely the architects and engineers. Often the lowest qualified bid is selected for the job. The GC’s bid, or set price, is based on the contract terms and the construction drawings. Should the GC expend less than its bid, then it will profit on the differential. This tends to foster a competitive relationship with the owner.
If the GCs bid is over budget, then the owner will be over its budget limit from the start and will need to adjust accordingly. Therefore, until the construction documents are finalized, the cost of work stands somewhat unknown. At the end of the day, the owner is financially responsible for all of the potentially costly complications and discrepancies in what is in the field and what is in the contract documents.
GCs are brought on during the construction process. Given their lack of feedback during the pre-construction process, a GC may require the architects and engineers to go back to their drawing boards. Such change orders not only result in scheduling delays and cost escalations (including potential budget overruns), but can also spur frustration and arguments between all of the project participants.
GCs usually maintain a group of reliable and specialized subcontractors accustomed to working together, and as such, there is a sense of familiarity, trust and comfort. However, the relationship between the owner and the GC is often quite disconnected (more so than that between the owner and a CM). Once the construction process is underway, the GC primarily interacts with the owner through the architect. There is little to no effort to foster an environment of cooperation and collaboration between the GC, owner, and architect. At times, this can result in a confrontation and hostility.
Construction managers become involved in the process during the pre-construction phase, and continue to work on behalf of the owner by overseeing the construction project from start to finish. By involving CMs early in the development process, the design team can make more informed decisions. The construction team can derive more precise estimates, thereby saving the client time and money down the road. The collaboration between the client, construction manager, architects and engineers results in a better informed and more efficient project process and further strengthens relationships.
Construction mangers are paid based on a predetermined fee. This evades a competitive relationship with the client yet typically infers a more expensive option. The hiring process for CMs is centered more on qualifications and trust rather than cost. That said, when it comes to subcontracts, CMs can profit off the subcontractors but are often not held responsible for subcontractor problems. Instead, this risk falls to the client.
In summary, although the GC tends to be a less expensive option upfront, the benefits of a CM typically outweigh the price differential over the long run.