Very often, the difference between a general contractor (GC) and
a construction manager (CM) is not what we believe it to be. The
specific terms and conditions of the contract - not the titles
(General Contract vs. Construction Management Agreement) –
are what define the rights and obligations of the parties. In
particular, construction management can be a very malleable
CM Agreements Can Vary Greatly
First, the term "Construction Manager" embodies more
than one contract model. In a more traditional CM Agreement, the CM
is advisor to the owner, and often acts as the owner's agent;
but the owner contracts with trades and suppliers. In contrast,
there is the CM-at-risk model; a CM-at-risk takes on responsibility
for construction, and contracts with trades and suppliers directly.
It is often unclear from the document title alone whether a
particular CM Agreement is one or the other. But these different CM
arrangements are substantially different, both legally and
practically speaking. In my view, a CM-at-risk relationship has
more in common with a GC relationship than it does with a more
traditional CM relationship.
Second, one CM Agreement can differ quite significantly from
another. Pricing and payment structures, allocation of
responsibilities, the procurement process, involvement in
pre-construction, and most importantly responsibility for the
design, work and schedule; all these components that define the
relationship tend to vary not only between GC and CM relationships,
but also from one CM relationship to the next. The CM role is one
that lends itself to customization.
Assumptions Lead to Failures and Disputes
As a result, I have seen a number of owners, contractors –
and particularly construction managers - making the mistake of
assuming that roles, responsibilities and lines of communication
are the same from one construction management relationship to the
next. Sometimes it is a failure to recognize the distinction
between a construction manager-at-risk and other CM arrangements.
More often, it is a case of assuming that a new CM contract is
basically the same as the one before. The fact is, there is a great
variety of custom CM and GC contracts in use, and even
"standard" contracts such as CCDC 5A and CCDC 5B* may
vary widely once special conditions are incorporated. Such mistakes
can often lead to legal disputes, as different perceptions
regarding the CM's role can lead to tensions, and assumptions
regarding the CM's role can lead to failures of coordination,
supervision, scheduling and communication.
Read the Contract
At its' core, I guess this post is simply a reminder to read
the contract. And... don't pay too much attention to the title
of the contract document. Whether it is entitled General Contract
or Construction Management Agreement (or something else altogether)
is sometimes more misleading than helpful, as it can lead to
incorrect assumptions regarding the relationship structure and
*CCDC 5A is an example of a more traditional CM Agreement;
CCDC 5B is an example of a CM-at-Risk Agreement.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Title requisitions, and responses to title requisitions, are often evidenced by two simple letters back and forth between solicitors; and yet, in the content of those two letters is the meat of the real estate transaction.
Now that the turmoil attendant upon the transference of power from one great party in the State to another has subsided, people may be permitted to devote their minds to a consideration of those sectional questions which are not less important for the welfare of the persons concerned, than are the great national issues upon which they have just pronounced judgment.
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