Project Management versus

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Construction Management
Achieving the Best Fit
In today's marketplace, the choices regarding con- of competitive bidding.
Each project is
struction are becoming more and more varied. Not Construction Manage-
so many years ago, an Owner's decisions were lim- unique and needs ment is a progressive, more
ited to choosing a designer, a contractor, and a manu- to be evaluated as "convenient" method of con-
facturer. These choices, however, have broadened to which method struction project administra-
drastically. Not only have means, methods and pro- will be the best fit tion. The Owner has only one
cedures for construction expanded, but the admin- for the Owner. direct contract, with the Con-
istration process alternatives for construction have struction Manager. The Con-
become virtually limitless. There are, however, two tractor becomes a subcon-

Data
main options which are prevalent in the industry, tractor to the Construction Manager (Consultant).
Project Management and Construction Management. The Owner is not bothered by having to make every
Project Management is the conventional method decision and may realize a time reduction in the comple-
of construction administration. The Owner has di- tion of the job. Finally, the
rect contracts with both the Consultant and the Con- Owner's accounts payable
tractor. The Owner is able to retain direct control department only has to deal
over all aspects and the quality of the project. This with one company. OWNER
process allows the Owner more flexibility in decision- Similarities
making. The Owner ultimately makes the final deci- Project Management
sions. In addition, the Owner may realize the benefit and Construction Manage-

/
A
Left: Project Manage- CONSTRUCTION
ment Diagram MANAGER

Right: Construction
CONSULTANT OWNER CONTRACTOR
Management Diagram

Note: Arrows indicate

contractual relationship. CONTRACTOR

Project Management Construction Management

Advantages Disadvantages Advantages Disadvantages
• Owner retains con- • Owner can be- • Owner not bothered • Owner loses a level
trol over all aspects/ come over- with having to make of interface with all
quality of the project whelmed with the every decision companies except
• Owner maintains minute details of • Owner's accounts Construction Man-
flexibility in decision- the project payable deals with ager
making • Owner's accounts only one company • Owner could invest
• Owner makes final payable has to deal • Owner could realize more money than
decision with multiple time reduction in with conventional
• Owner realizes ben- companies completion of job process (benefit
efits of competitive • Increased quality and need weighted
bidding control responsibility per project)
with the Consultant
 petitive bidding or negotiate a price with
a specific Contractor. This, however, is
Project Construction the Owner's decision to make. The Con-
sultant can advise, but has no direct
Management Management responsibility for this decision. Under a
Owner has direct, Owner has direct, Construction Management agreement,
contractual rela- contractual rela- the Consultant has greater responsi-
bility for selecting the Contractor. The
tionships with both tionship with the Consultant and Owner make the deci-
the Consultant and Consultant. Owner sion about competitive bidding or ne-
the Contractor and has only third-party gotiating a price once the project bud-
get has been established. The Owner
ultimately makes relationship with may not realize the most competitive price
all decisions. the Contractor. with this process. The Owner has del-
egated that responsibility to the Consult-
ant under the framework of the Contract
Budget.
ment are the same in many ways. First, they both The third difference falls in the mat-
involve the same three parties: the Owner, the Con- ter of liability. Under Project Management, the
sultant, and the Contractor. The Consultant repre- Consultant has liability only for the design. The
sents the Owner under both contracts. All commu- Contractor has liability for the actual work and
nication between the Owner and the Contractor flows its conformance to the Construction
through the Consultant. The Contractor, along with Documents. Under this agreement,
any subcontractors, still performs all of the con- for any decision which the Owner
struction work. The Consultant will still be makes without the Consultant's
responsible for developing and approval, the Owner assumes
interpreting the Construction responsibility and liability. Un-
Documents, observing the der Construction Manage-
work, performing inspections, ment, the Consultant as-
and reviewing submittals. sumes responsibility for the
Differences design and also for the work. If
The first difference between the two an issue were to arise, the Owner only
methods deals with the relationships be- has one entity with whom to deal. The
tween the parties. In Project Management, Consultant is responsible to the Owner for
the Consultant and the Contractor have no formal con- any part of their Contract which is not met. The Con-
tract between them. They do have a third party rela- tractor is responsible to the Consultant for their work.
tionship which stipulates how they are to work together. The final liability will be shared by the Consultant
They rely on each other to perform certain duties which and the Contractor if the Contractor fails to perform.
affect each other's work, but their contracts are only The Owner's direct liability under this management
with the Owner. In Construction Management, the Con- system is less than under Project Management.
tractor has a direct contract with the Consultant and does The Conclusion
not have any direct agreement with the Owner. The Con- Both Project Management and Construction Man-
tractor now has a third party relationship with the Owner agement have advantages and disadvantages asso-
and is paid by the Consultant, not directly by the Owner. ciated with them. Each project is unique and needs to
A second major difference arises in contractor se- be evaluated as to which method will be the best fit for
lection. Under a Project Management agreement, the the Owner to achieve company objectives and realize
Owner selects the Contractor. The Owner can use com- the greatest return on investment.

Total Building Envelope Management Solution SM

www.structuretec.com
(800) 745-7832
12/2002