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General Contracting vs Construction Management

The General Contracting approach to construction is based on the theory that the best and most economical way to construct a building is to choose an architect and then select contractors through a series of competitive bids. The bids are normally limited to a small number of prime contracts and awarded contractors will conduct their own subcontracting for the building process. Costs from subcontractors are marked up by the prime contractor and included in the bids to the owner.

Contractors are usually selected on the basis of the lowest bid; however, a higher bid may be selected if that bid appears to offer better performance or product for the money. Contracts should be awarded to licensed contractors and engineers who have established records for integrity and dependability. It is important that those primarily responsible for the project - the architect, the engineers, and the contractor - have had previous experience with similar projects.

When the construction phase is underway, the owner's needs are conveyed to the general contractor and subcontractors through the architect and the architect will make periodic on-site inspections to determine that the contract specifications are being carried out.

In the general contracting method of building delivery, the owner's interests are often contrary to the general contractor's profit motive. The owner is, therefore, responsible for protecting its own interests.

Construction Management

The Construction Management approach utilizes a construction manager who acts as agent and is responsible for all phases of the building process, including financial tracking.

This approach was developed as a result of concern about the management of large projects. Unlike the traditional general contracting approach, the construction manager, as agent for the owner, works directly with each prime contractor, maximizing Cost Savings for the owner. Prime contracts are broken out into multiple units and directly bid and awarded. Thus, the built-in mark-up by the general contractor is avoided. IN ADDITION TO OTHER BENEFITS OFFERED BY CONSTRUCTION MANAGEMENT, THE SAVINGS REALIZED BY THE OWNER IN AVOIDING OVERHEAD AND PROFIT MARK-UPS BY A GENERAL CONTRACTOR WILL, IN MOST CASES, MORE THAN COMPENSATE FOR THE CONSTRUCTION MANAGER'S FEE.

The construction manager assumes overall responsibility for the coordination and completion of the project. It is important to note that the construction manager functions as agent and on-site coordinator for the owner. In supervision of the job, the construction manager uses techniques such as the Status Report to ensure communication between all parties and Meeting Minutes, Scheduling and Procedures as driving mechanisms to maintain the progress of the job while keeping the owner informed of the status.

Finally, the construction management firm will supply the owner with regular and final accounting of funds and invoices. Accounting and Fiduciary Responsibility are key to the quality of the services offered by the construction management approach.

Construction Manager is an Agent/Fiduciary for the owner and acts as its trusted construction professional in all project administration for the project. Jeffco works only as agency construction managers and, therefore, avoids a potential conflict of interest which is inherent in combining construction management and general contracting in one form.