General contractor v. CM, page 10

Monday, May 14, 2007 at 12:03 PM EDT

REMINDER: all these blogs' references to construction manager are to the particular form of construction management services being used on public school building construction in which the work of the project is bid by “work packages” directly to the school district.

In the previous blog, the studies quoted found that the increased costs of the construction manager system ranged from 20 to 30 percent. As I noted in earlier blogs, comparing the general contractor and construction manager types of contracting in terms of cost is like comparing apples and oranges. The increased costs are attributable to the following factors:

1. The CM does not act as general contractor but as the owner's representative, and has no role in the actual construction work.
2. The subcontractors bidding work packages directly to the school pay substantially higher bonding rates than a general contractor.
3. Subcontractors bidding work packages must cover work not normally done by their own forces, so increase their bids to cover those costs.
4. Subcontractors do not have the expertise to evaluate the entire project for construction difficulty and scheduling problems, so increase their bids to cover those costs.
5. Subcontractors often face delays and re-mobilization issues due to lack of coordination of the work.
   A subcontractor must include extra money to cover this cost.
6. Material suppliers must bid to subcontractors they may not be familiar with, so increase their bids.
7. Completion dates and liquidated damages are unenforceable under construction manager system due to multiple interdependent contracts.
8. Construction manager costs are not known. Typical costs include rentals, on-site and home office personnel costs, support costs, and miscellaneous other costs billed on a monthly basis.
9. Fewer trade contractors bid work packages due to perceived “gamesmanship” or favoritism in bid analysis.

Next blog: An analysis of comparative projects