Time was, when you had a big construction or renovation job, you hired a general contractor, and if the job was big enough, that contractor hired subcontractors.
But in recent decades, a new player has entered into the process, helping with not just individual projects, but building-wide and multi-building jobs: the construction manager. The “CM” as he or she is often known, takes pressure off owners and managers by overseeing the job and coordinating between contractors, building administrators, and sometimes even residents.
Selecting a CM
Not every project calls for a CM's expertise, so it's important for boards and managers to consider whether or not their particular project would benefit from having some professional oversight and management. Obviously using a CM adds to a project's price tag—so why hire one?
There can be many reasons: project size, building size, product duration, cost and complexity. The Construction Management Association of America (CMAA), a nationwide organization headquartered in McLean, Virginia, breaks down a construction manager’s responsibilities as project management planning, cost management, safety management, contract administration, cost management and quality control.
These functions can be further broken down to include developing and directing a formal construction management plan, organizing and leading a project team, developing project budgets and cash flow, reviewing design documents, keeping abreast of safety legislation and workers’ compensation law, and monitoring workers' compliance with job site safety protocols.
According to Richard Singler of Singler Enterprises, a construction consultant headquartered in Brooklyn, “A good general contractor is capable of running the job. But at times, it is better to have a CM who oversees the project for cost, quality and time frames. This adds to the cost of the job, but adds a layer of security. It also adds a sense of comfort for the owner, having someone there to keep the owner’s interest in mind.”
Once you’ve determined that your project calls for a construction manager, how does the selection process start? John McKeon, vice president in charge of communications for the CMAA, says that CMs should be selected by a qualifications-based selection process.
Typically,” he says, “there’s a two-stage selection process in which bidders are evaluated based on experience, technical expertise and qualifications—then cost is determined in a separate negotiation with the bidders identified as best qualified.”
Most construction managers come to the field from an engineering or a contracting background, but some start their careers as architects, and still others are also licensed contractors who now specialize in construction management.
According to Patricia Garbutt, owner of Patricia A. Garbutt, PE, a Manhattan-based construction consultant, some CMs actually have specific degrees in construction management. However, she adds, it is better to have worked in construction, either as an engineer or an architect. Board members, she says, should interview several CMs about their experience and how much time they will have for the project.
It may be useful to note that some of the larger property management firms in the city have their own construction managers on staff, or even an entire construction division to help out their co-op and condo clients. Most of the time however, management companies go through the same selection process for a CM as any other vendor or service provider. Of course, organizations like CMAA can help—they have regional chapters, including one for Metro New York/New Jersey.
Orchestrating the Process
So, say, you’ve hired a construction manager for the job. How does he or she come onto the job? Does he or she begin at the same time as the contractor? Or beforehand?
Usually beforehand, professionals agree. Before the first hammer-swing, construction managers can help with the bidding and selection process, as well as handling the contracts themselves.
The CM is essentially the building's representative,” says Garbutt. "It's a good idea for owners to hire a representative for any project, because the...fee will most often be paid for in the money that they save the owner.” Garbutt also recommends preparing good contract documents before hiring a contractor. "If you have a construction manager before you start construction, the construction manager can review those contract documents. If a board just goes out and hires a contractor with no written documentation, it's very hard for anybody to get that contractor to do anything, because there's no paperwork that lays out the requirements.”
“The CM is basically orchestrating the process,” says attorney C. Jaye Berger of the Law Offices of C. Jaye Berger in Manhattan, who works with co-ops and condos. “The CM is a little more of a representative of the owner than the contractor. They [the management] are hiring a CM hoping he can more effectively control costs on the project.”
When there’s a construction manager, she adds, there may not even be a general contractor. “There may be a construction manager and a bunch of contractors. The CM may help the building solicit bids from a variety of trades and help the building get a better price.”
Whatever his or her responsibilities, the construction manager is expected to visit the site. How often depends on his contract and the scope of the job. One some jobs he has to be on site every day; others, once a week. It all depends on the job. How many projects one construction manager can handle also depends on the particular jobs involved. If it's two projects across the street or down the block from each other, that may work swimmingly. If two concurrent jobs are in the Bronx and on Staten Island, it may not.
They Pay For Themselves
Now, we get to one of the main factors that will influence boards or managers who are considering hiring a construction manager: price. Singler says that in his experience, construction managers can be paid by flat rate, by the hour or by project duration.
McKeon of the CMAA, on the other hand, says that typically, the CM will be paid a percentage of the project’s initial budget. “We did a survey back in 2007 that found these fees ranged between 3.8 and 6.9 percent of the total cost, varying by geographic region, type of construction, etc.,” he says.
Bear in mind, of course, that his organization is a nationwide one and that things may be different here. Berger, for example, mentions a figure of between 8 and 10 percent.
On the subject of whether hiring a construction manager is worth it, McKeon believes that a good construction manager can “pay for himself” by making the work go more smoothly, keeping workers on schedule and curbing waste. “Our position is that working with a CM is going to result in a smoother project that finishes on time and on budget, with fewer change orders, fewer disputes, and less risk of litigation,” he says.
In addition to overseeing the work, construction managers can also manage the books and records, issue payments and review change orders. They also keep the owners up to speed on how the project is progressing and coordinate loose ends, says Singler.
"I think there are only advantages to hiring a construction manager," says Garbutt. "All boards are concerned with two things: time and money. They want the project done on time, and preferably within - or under - budget. If you work with a construction manager... they can work with the board before the project goes out for bid, help hire a professional to put contract documents together, negotiate change orders, and put a schedule together at the beginning of the project [for work and payment].”
Some large management companies may keep a list of construction managers they’ve already worked with. If this isn’t true in your case, other professionals may be able to recommend one. In addition, the CMAA’s web site offers a “Find-a-CM” database searchable by geographic location.
As far as insurance is concerned, the CMAA says that construction managers basically carry ordinary business insurance. Professionals we interviewed for this article mentioned general liability, workers’ comp, errors and omissions, and completed operations insurance as being apropos.
Who Do They Report To?
Now that you have a construction manager overseeing your job, who does he or she report to? Usually the manager or, as Berger says, “one or two board members who have taken on a larger role.” But whoever it is, it should not be so many people that the CM is forced to chase down multiple people in order to simply do his or her job.
While a construction manager is a definite plus on certain jobs and does provide a valuable service, hiring one isn't a panacea for all that can beset a project. Even if you do your due diligence, things don’t always work out.
Mark Zimmerman, former board president of Concord Village, a 1,023-apartment co-op complex in Brooklyn, recalls that when the co-op was doing a major roofing renovation. Because of the job’s large scale – seven high-rise buildings—it was decided to hire a construction manager. However, he says tensions developed when “the CM wanted to hire his guys, but the board wanted to submit those jobs to bid.” The CM was allowed to work through his contract, but the job was continued and finished afterward without him.
“Often,” adds Berger, “people call me after they have problems. Someone could get killed on a project—I’ve heard that several times. It could be that [the site] hasn’t been thoroughly examined, and it turns out there is asbestos in the building, which means construction has to stop. Or it could be that there’s a problem when you analyze books and records – the money doesn’t gibe properly.” However, she points out that these same problems can certainly occur on jobs without construction managers.
All in all, hiring a CM can prove invaluable for a project because it places someone in the midst of the work being done who advocates for the board’s best interest, but who has no stake in the actual construction contracts. A capable, competent, well-chosen construction manager can add significant value to the construction process, and make things easier on everyone involved.
Raanan Geberer is a freelance writer, reporter, and editor living in New York City.