General contractor v. CM, page 9

Friday, April 13, 2007 at 4:29 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.

The decision of whether to use a construction manager instead of the traditional design-bid-build method often is made by superintendents and school boards based on a good sales pitch from a CM firm. The methods and procedures of the construction industry are complex and not well understood by those who are outside the industry; most school officials do not even know what questions to ask. Properly writing criteria for CM proposals and evaluating such proposals is extremely difficult. Even facilities management departments of major state entities have difficulty developing evaluation criteria that does not deteriorate into subjective "popularity contest" selection.

There are few studies of the costs of similar construction management methods for public construction, primarily because the method is rarely used, though other types of construction management have been used. Such studies were done on the effects of New York State's "Wick Law." The Wicks Law mandated that public bodies in New York issue multiple construction contracts on public projects exceeding $50,000. These multiple prime contracts required that electrical, plumbing and HVAC be separate contracts, with a fourth prime contract to a general contractor for the remainder of the work. In addition to numerous problems with coordination of the work, increased change orders, disputes and delays, the New York School Boards Association in 1991 issued an impact statement estimating that the Wicks mandate increased costs from 20 to 30 percent. A study by the New York State Division of Budget in May, 1987 found that the Wicks Law increased construction costs on a variety of public buildings by 24 to 30 percent. [Note: This information comes from the American Council of Engineering Companies of New York.]

If the costs increased that much with only four prime contractors on a project, it makes sense that even more prime contractors would increase the costs at least as much if not more.

More on cost comparisons in my next blog.