The Construction Management ApproachTHF. CONSTRUCTION M 1NACFSIFNT APPROACH
Construction 'Management (CAT) has developed in recent years as an
alternative to the traditional building process. CM is especially applicable
to the organization and management of major and complex construction
projects. It has been used by many private developers, local and state
Public agencies,and federal agencies with general success. Because the
Construction _Management approach may be modified to assume many different
forms, public agencies have used it on a variety of construction projects
including buildings, bridges, roads, waste water plants,and transit systems.
In each application the basic thrust of construction management is to
develop a "team" approach to building. The team approaci: coordinates the
working relationshps of the public agency developer, project design pro-
fessionals,and an organization termed the "Construction Ala na@-er." The
objectives of the new team relationships inherent in the construction manage-
ment approach are to better coordinate the building process, to reduce adver-
sary relationsilips,and to deal withbrobiems and opportu:itic-s rro:.ptiv
where delay could bring on cost overruns. Table 1 lists benefits sought from
construction management use.
Construction management differs in several important ways from
procedures traditionally used for public sector construction. First, there
Is the involvement of a construction manager as a multifaceted professional
group to provide project management services and to administer construction.
Figure 1 illustrates this relationship. Second, the CAI group brings significant
construction expertise to the design phase to augment the capabilities of
project design professionals. Third, the approach places great emphasis on
integrating design and construction schedules, cost estimating,and cost
accounting as management tools and makes the CAI organization responsible
for their use. Fourth, the construction manager is given many of the respon-
sibilities traditionally assumed by a project's general contractor. Finally,
awards will frequeruIv be made for multiple prime construction contracts,
rather than numerous subcoatracts made under a single general contract.
5
Table 1
WHY CONSTRUCTION i1LANAGE:IIENT IS USED
TO COORDINATE DIVERSE CONSTRUCTION FUNCTION;: ON MAJOR PROJECTS
e On major complex projects the approach integrates the skills of in-
house staff, consultants, design professionals, and building experts
into a team effort.
• Productive communication among design professionals, building
contractors, consultants, and other professionals has been increased.
The extent to which this is achieved dill vary depending on the form
of CAI arrangements used.
TO REDUCE THE TOTAL TIME FOR DESIGN AND CONSTRUCTION
• Portions of building design and construction can be undertaken
simultaneously upon a reliable and predetermined schedule.
e This helps to avoid long -tern: project uncertainties that can result
from materials and equipment shortages, labor problems, and other
construction delays.
REDUCE CONSTRUCTION COSTS
• Introduces extensive cost control efforts at the earliest stages of
pre -design and design -including cost estimating, cost accounting,
and value management.
• Identifies options involving cost and program scope at an early stage.
• Helps to counteract cost of inflationary trends and reduces the cost
of financing by expediting design and construction.
TO INCREASE PROJECT FLEEUBILITY
• Shorter development times make it easier to forecast and adapt to
construction problems which are related to design decisions.
• Possibilities for involving small or minority contractors can be
enhanced if contracts for construction disciplines are let separately.
J
FIGURE 1
TRADITIONAL AND CONSTRUCTION MANAGEMENT
. APPROACHES TO PROJECT ORGANIZATION
TRADITIONAL APPROACH CONSTRUCTION MANAGEMENT APPROACH
OWNER
ARCHITECT -
ENGINEER
GENERAL
CONTRACTOR
BCONT
OWNER
CONSULTANTS
FOR CONSTRUCTION ARCHITECT -
PROGRAMMING, MANAGER ENGINEER
TESTS. ETC.
CONTRACTOR(S)
NOTE: THIS CHART INDICATES FUNCTiONAL WORKING RELATIONSHIPS,
NOT THE VARIOUS LEGAL CONTRACTS 'WHICH ARE IN EFFECT.
7
Though these are major changes from the traditional building process,
existing legal constraints can still be met and several basic project functions
remain essentially intact. Public bidding procedures can still be used for all
actual construction work. In fact the CM approach generally increases com-
petition by opening up the process to a greater number of qualified bidders.
Responsibility for all design decisions remains with the project design pro-
fessionals with concurrence from the owner. The owner retains final control
of the building process, often being more involved in project decisions than
would be the case if CM were not used.
Finally, construction management relationships can be developed which
provide the owner with a contractually guaranteed limit on construction costs.
As mentioned above, individual construction contracts can be of a publicly -
bid fixed price nature. In addition, the contract of the construction manager
can include several forms of guarantee for total project cost. This subject
is discussed in more detail later in this document. For the moment, however,
it can be noted that it may not be necessary for the public owner to secure
cost guarantees from the construction manager. In fact, it may be counter-
productive to require these guarantees.
LJ
HOW CONSTRUCTION 1LANAGEMENT WORKS
Construction 1anagement (CM) refers to a type of contractual and
professional working relationship initiated by a building owner for project
design professionals and the construction manager. The approach can be
applied to construction of a particular facility or for construction of several
related facilities within an overall construction program. The construction
manager may be an individual or group of individuals on the owner's staff.
More frequently, however, the construction manager represents an outside
firm or joint venture working as an agent of the jurisdiction acting in the
owner's best interest under a professional services contract on a specific
construction project.
Many variations of the construction management approach have been
used by private developers and public construction agencies. Because of the
special characteristics of each major building project and rules and regula-
tions specific to each jurisdiction, no single form of construction management
relationship will best suit the particular needs of all Jurisdictions. 1Iaterial
presented later it, this publication will assist public agencies in considering
alternative approaches and in defining specific functions required of a con-
struction manager. A broad overview of construction management services,
however, is provided below. The aim here is to indicate the kinds of services
a construction manager can provide rather than to specify any hard and fast
rules for use of construction management services through predesign,design,
procurement, and construction phases of a project.
Construction management is most effective when employed from a
project's predesign stage through construction until final occupancy. It is
Possible, however, to employ construction management services for only a
single phase of a project, but the benefits of the approach may not be fully
realized.
Predesign Construction °Ianagement Services
If the public agency determines to use an outside group for CDI
services, the c-)nstruction manager may be placed under contract even before
the selection of project design professionals. In fact, one of the first functions
9
of the construction manager may be to assist the agency in placing the project
architect/engineer under contract Alternatively, if the design firm is selected
first, it may be one of, its tasks to assist the owner in contracting for construc-
tion management services Either way, it is essential th,r..t the construction
manager and the design professionals work closely together with non -
conflicting contractual responsibilities. Some developers avoid this problem
by contracting with project design professionals to provide CNI services.
During a project's predesign phase, the construction manager can aid
in Planning, programming, budgeting, and scheduling The construction
manager can act to correlate the input and requirements of the several Public
agencies with an interest in the project. Preliminaii- budget analysis of the
project and assistance in site selection may also be performed by the con-
struction manager. Perhaps one of the greatest contributions construction
management services can make during the predesign phase is to review basic
requirements for the facility with the owner and design professionals to assure
that the owner's real needs will be met effectively within the allowable budget.
During the predesign phase of a project the expertise and diversity of
possible services of the construction manager can be used by the owner to
back up in-house project managers and to complement the capabilities of the
project design professionals. Each public agency, having individual needs,
will require differing services from its construction manager Serious
attention must be devoted before design and construction management agree-
ments are signed to assure that all necessary Dredesign functions will be
completed without conflict or overlap by either the owner, the design pro-
fessional or the CAI, but all working together as a team.
Design Phase Construction Management Services
Many past users of construction management believe that the greatest
benefits from using the approach occurred during the Proiect's design phase
since flexibility remains allowing for major cost and time saving modifica-
tions. The construction manager's emphasis at this stake in the building
process is to provide continuing project management, to coordinate the
building process, develop schedules, and to review designs and specifications
to save the owner construction time and money. Another important function
is to develop cost models and component budgets.
During a project's design phase the responsibilities of the construction
manager do not include performance of actual design decisions The CAI will
review designs, but final decisions are made by the design professionals and
the owner. Prime responsibilities of the CAI are to keep design activities on
10
schedule, to. develop construction schedules, and to provide expertise to reduce
and control costs The cost control function of the construction manager has
two very important parts: ra) cost estimating and 'b) value management.
Greater emphasis is placed on cost estimating as a management tool
under C1\l than is common with traditional project administration The
construction manager reviews estimated and actual construction costs as an
independent party, often using computers extensively. Construction cost
control (and budget control) is a basic function of the construction manager,
not a secondary function. The construction manager's familiarity with
detailed labor and materials costs and typical cycle times is usually greater
than most design firms. Cost estimates are regularly provided to the project
design professional and the local administration throughout the design phase
as a major feedback for evaluating whether the design is within desired cost
boundaries. On certain projects a representative of the construction manager
will work full time in the design professional's office to speed the exchange of
information on cost estimates.
Value Management is the second design phase approach to cost control.
Though discussed here as a distinct form of cost control, many construction
management organizations integrate value management into their overall cost
control services. Value .Management is an organized and vigorous search
directed at the analysts of requirements for achieving essential functions at
the lowest total cost, consistent with needed performance, quality, reliability,
aesthetics, safety, and operation. Value specialists routinely expect that
project savings they suggest will exceed the cost of their services by a factor
of eight to one. USA Public Buildings Service reported $10 million in savings
for 1974 from value management programs with a return on its investment of
nearly thirteen to one.2
Construction management organizations are well -suited to provide value
management advice on construction projects as they can take an independent
look at design progress using the wealth of construction knowledge and design
knowledge at their disposal. Typical value management examples could
include properly sized heating and cooling equipment for life -cycle cost and
energy savings; Information for choosing the most economical structural
system; advice to modify a design to speed construction sequencing; and
advice on the most economical interior finishes and partitions, based on
initial cost and projected maintenance costs.
Much of the construction management activity that takes place
simultaneously with design is directed toward scheduling and coordinating the
2 FY 1974 Valu-e Janagement Annual Report, Putlic Buildings Service, U. S.
General Services Administration.
11
construction process. Overall project schedules including both design and
construction phases are prepared by the construction manager. Great empha-
sis is placed on these schedules as management tools to increase project
efficiencies. As design progresses the construction manager develops a
plan for separating construction work into an integrated set of construction
contracts. Work is frequently separated by construction disciplines - heating,
electrical work, finishes, etc. On the other hand it may be desirable to
separate some construction work in terms of assemblies within the facility.
This would be appropriate if a given assembly (e. g. , an air diffuser with
built-in lighting) could best be installed by a single contractor with multiple
capabilities (e.g. •, heating and electrical work).
Other concerns may enter the decisions on separation of construction
contracts. For example, laws or policies on the use of local firms or small
businesses and minority contractors are often important in forming a plan
for separating construction work and developing contracts. Overall, the goal
of the construction manager in developing this plan for construction contracts
is to assure that all necessary construction work can be contracted out in the
owner's best interest. As prerequisites, each construction firm must be able
to carry out its portion of work efficiently, and problems such as overlapping
trade jurisdictions must be avoided.
As the plan for separating construction work is developed and approved
by the owner, the construction manager develops bid packages for the work,
conducts briefings, and finally assists the owner in selecting competent firms
that have submitted responsible low bids.
Construction Phase Construction Management Services
Though the construction phase is discussed here as a separate activity,
a major aspect of construction management is that it facilitates integrating
schedules for both design and construction into a smooth process. In doing
so, the construction manager can usually reduce the total time between the
start of design and the completion of construction to save the owner consider-
able cost. Time savings have frequently exceeded six months. Technically
this approach is called "phased design and construction" or simply "phasing."
("Fast tracking' is often used in popular jargon to mean phased design and
construction, but has often been a misused term. ) Phased design and construc-
tion has been difficult to exploit within the traditional building process and
often becomes one of the reasons why public agencies and private developers
choose to use the construction management approach. Grant constraints and
other financial reasons more commonly prevent phasing in traditional project
12
arrangements than do technical constraints.
The procedure for phased design and construction is illustrated
diagrammatically in Figure 2. Briefly, the procedure works as described
below. Procurement of long lead time material (e. g. , steel) and equipment
often will begin long before the design phase is complete. Similarly, off -site
fabrication of special assemblies and components will also be started at an
early stage. Then, as design progresses, construction contracts for various
portions of the facility such as excavation, foundations, and steel work will be
competitively bid and let so that each portion of construction can be initiated
at the earliest possible time. in this way construction procurement and actual
construction can often begin about one-third through the design phase.
The early start of construction under phased design and construction
procedures may pose difficulties for some public agencies. For example,
relevant local, state, or supporting federal agency rules or regulations may
require that all design documentation is complete before construction begins
or that nearly all construction work is let as a single lump -sum contract. In
several cases, however, local jurisdictions have found that these constraints
may be subject to interpretation or may be modified for the project at hand.
An additional problem can arise under phased design and construction
procedures with current building permit and plan review procedures in
certain jurisdictions. Several major cities, however, such as Denver,
Colorado, have made administrative changes to building code procedures to
accommodate phased design and construction. The changes allow partial
building permit issuance (e. g. , "foundation -only" or "structure -only"). The
modified procedures have been successful, but may place a greater than
normal work burden on the building regulatory agency depending on local
procedures. Permit fees for phased design and construction, therefore, may
be higher than for the traditional building process.
Phased design and construction is routine under construction manage-
ment, but is not a necessary aspect. Before a decision is made the jurisdic-
tion should discuss this subject with the project design professional since it
requires the designer to have a solid conceptualization of the project at an
early stage and may increase the firm's work load. Legal counsel also
should be contacted.
During construction, the construction manager is responsible for ad-
ministering the prolgress of construction contracts. in public sector con-
struction, the construction manager frequently is not engaged to perform
any of the actual construction work. This is done so that all construction
13
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work will be competitively bid and to avoid possible conflict of interest. how-
ever, tied in with the responsibility to administer the construction contracts
there usually will be a series of related functions including, but not limited
to cost accounting, overall control of the construction site, site security,
maintenance of records, and inspections. It should be noted that the inspec-
tions conducted by the construction manager are in addition to the periodic
inspections made by project design professionals and regulatory officials
and are, in general, to be more frequent and more detailed (e. g. , "Clerk of
the Works" inspections).
In the discussion above, the goal has been to present an overview of
the construction management approach. More detailed listing of these
services can be found in later sections of this document and by consulting
the references described in Appendix A. Repeating several major points, the
construction manager works as a professional agent of the owner to control
costs and budgets and to coordinate all activities within an efficient schedule.
During design the construction manager provides cost control through value
management and preparation of detailed cost estimates. During the construc-
tion phase (which under phasing procedures may be initiated before the end of
the design phase) construction management services normally include admini-
stration of all construction contracts, coordination of schedules, cost
accounting, and often general control of the construction site.
15
Table G
DETAILED CONSTRtiCTION \L%NAGE\TENT FUNCTIONS
DURING PREDESIGN AND DESIGN PIiASES
• Perform budgeting, programming, and scheduling including
predesign economic trade-off studies for the owner.
• Assist the owner in putting the architect -engineer under a con-
' tract tailored to the project.
• Perform value management on building systems and equipment,
specification and criteria requirements and alternative designs.
• Suggest new materials, technology, methods, constraints, and
sequencing.
• Prepare and periodically update a project budget for the owner's
approval and prepare trade -by -trade cost estimates or bid
package cost estimates.
• Analyze procurement requirements and responsibilities for
safety precautions, temporary site facilities, and equipment,
materials and services for common use of contractors and
ensure that these are included in the construction documents.
• Provide guidance on government requirements and special
programs affecting labor and community relations.
• Determine applicable requirements for equal employment
opportunity programs for inclusion in contract documents.
• Advise on the method to be used for selecting contractors and
awarding contracts. If separate construction contracts are to
be awarded, recommend separate construction functions to
avoid jurisdictional overlap, verify that all necessary work is
included, and allow for phased construction.
• Assist the architect -owner in presentation of design documents
to public agencies as required.
• Prepare bid lists for approval by the owner and professional
design team, and make certain that contractors are qualified and
capable to perform.
• Assist the owner in pre -bid conferences, bid evaluation, and
development of construction contract documents.
m
DURING THE CONSTRUCTION PHASE
• Administer construction contracts.
o Coordinate in the owner's interest the work of contractors with
activities and responsibilities of the owner and architect -
engineer.
o Schedule and conduct progress meetings.
e Provide a realistic detailed schedule for operation of construction
contractors.
e Provide regular monitoring and frequent inspection of work to
determine progress and conformance with design documents.
o Revise and refine the approved estimates of construction costs,
developing cash flow reports and forecasts as needed and maintain
accurate cost accounting records.
e Expedite construction drawing preparation by the contractors,
architects, and engineers.
• Provide project office administration.
o Provide site security.
• Review bills from contractors and suggest recommendations to
the owner for payment.
• Recommend necessary or desirable changes to the owner and
architect -engineer. Review change orders and value incentive
proposals.
• Maintain project progress records.
o Assist the owner in checking out utilities, operational systems,
and equipment prior to occupancy.
o Determine final completion and notify the owner and architect -
engineer.
29
Table 10
SUGGESTED RFQUIREME'CTS OF CONSTRUCTION I TANAGER
The construction manager shall:
1. Be experienced in and competent to perform the type of services
required by the government (refer to Table 6).
2. Shall have acted recently as a construction manager on more than
one project of similar or larger size. Since the present-day notion
of construction manager is relatively new, this requirement may be
waived if in the judgement of the local jurisdiction there are sufficient
qualifications to justify confidence.
3. Be financially solvent.
4. Have built, designed or managed construction in the general geogra-
phic area or have good knowledge of local conditions and laws (or
have a joint ventare partner with this experience).
5. Be able to provide a qualified project executive.
6. Have a good reputation and performance record in areas of cost
control, value management, and schedule control.
7. Be in close geographic proximity to the project and project design
design professionals.
S. Be able to provide a list of management and support personnel who
will be involved with the project, and the extent to which they will
actually be involved.
41