Missouri school construction, p. 2

Thursday, March 08, 2007 at 2:52 PM EST

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.

Construction Management is a type of contracting typically used by private firms, in which a private owner chooses a firm to build its facilities. The CM firm may also employ the design team, and/or may be employed prior to the design process. A fee structure is negotiated and pricing is established, which may be a guaranteed maximum price or several other arrangements. The CM firm solicits quotes for subcontracting and other work by several methods. In private work, the CM firm will do certain types of the construction on the project with its own forces. Often, the CM starts work before the design is complete in order to do the project in the least amount of time possible. Private firms whose business income is tied to the date the facility is ready often use this type of contracting, because the savings in time actually offset any additional cost it may incur. The Construction Manager is “at-risk” in this type of contracting agreement, meaning that he actually does work and is responsible for the work he does. He is subject to various kinds of liability, builders' risk and employment law, and may be subject to actual damage penalties if he does not finish in the agreed-upon time.

In the state of Missouri, "construction manager at-risk" contracting agreements are illegal under current law for public construction. The reason for this is obvious, as the potential for conflict of interest, bribery, etc. rises where there are few or no objective criteria to select the firm to be used.

To get around the Missouri law on these agreements, some school districts have hired a "construction manager" to do paperwork and oversee their construction projects, but not do any actual construction work on the project. The CM firm is chosen based on various criteria. The selection criteria tend to be short and subjective, and leave plenty of room for interpretation. In some cases, the CM may even be involved in preparing the criteria before selection, and may be brought in early to help select the design team.

These CM firms review the plans and specifications and then separate the construction work into "work packages" for public bidding by subcontractors, rather than bidding the project to general contractors. The CM firm solicits bids for the school district, and helps prepare contracts between the school district and the various subcontractors. This process often results in the school district having contracts with 15-20 subcontracting firms. The CM firm then provides a "manager" on site to track the work and see that each subcontractor arrives to do his work according to the work package bid. If there is a discrepancy between work packages or a dispute as to the meaning of some instruction, the CM acts as mediator to solve the problem. However, the CM has no contract with the school district for any of the construction work, and under state law, CANNOT actually do such work. The CM does not provide a bond, nor can he be held responsible for errors and omissions on the project.

My next blog will discuss pros and cons of these methods.