3.2.10 Construction Management (CM)

There are two basic types of construction management contracts:

• Agency or CM for Fee. The CM acts solely as the owner’s agent, and the fee structure is based upon a percentage of the total project cost plus a list of reimbursable expenses. The owner issues contracts to subcontractors and purchase orders to vendors approved by the CM, and the owner pays subcontractors and vendors directly. The liability of the CM is limited to the “Standard of Care” provision similar to that of a design professional.
• At risk. The CM acts as the owner’s representative and its fee and list of reimbursable expenses is included in the contract sum. The CM often deals directly with contractors and absorbs any cost overruns. The liability of the CM is similar to that of a general contractor with a lump sum or GMP contract.