The Construction Management procurement approach, as the name implies, allocates a ‘Construction Manager’ to manage the project acting as an agent on behalf of the Employer. The Construction Manager then solicits subcontractors for eventual direct contractual engagement with the employer to perform the necessary work. 

Under Construction Management procurement approach, the traditional Contractor : Subcontractor relationship is bypassed through the formation of direct contracts between the Employer and the Subcontractors.  On the other hand, in ‘Management Contracting’, the Management Contractor has direct contractual engagement with the Subcontractors, as would a general Contractor but the level of risk is significantly less than the case under a Design/ Bid / Build arrangement.   

This means that in a Management Contract, the Employer only has only one contract to administer, whereas under the Construction Management approach there can be many contracts for the Employer to administer. 

The Construction Manager mainly functions in an administrative/ advisory capacity for hiring and oversight of the Subcontractors. This Construction Manager, if hired early in the project, can also be used to coordinate and provide input during the design process. 

The Construction Manager is not contractually liable for the performance of the Subcontractors since they are under contract to the Employer directly.  The use of the modified ‘Construction Manager At-Risk Contract’ does impart a certain level of responsibility since with the At-Risk Contract, the Construction Manager is committed to delivering the project within a guaranteed maximum price. 

In addition, the payment structure for the Construction Management contract is generally based on reimbursable costs plus fees, so the final project costs may not fully be determined until the project is close to completion. 

The Construction Management procurement approach can be effective with projects where the design process would benefit from the input of the Construction Manager in a consulting role and where the employer is highly experienced in the construction process and is able to rapidly make informed decisions.  However, allowances must be made for overall price uncertainty owing to the likely fluctuations associated with the Construction Manager’s costs. 

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