What is the Difference Between General Contracting and Construction Management?
Ever wonder what the differences are between General Contracting and Construction Management? Here’s a refresher.
On any construction project, there are always a number of key players involved. The owner, architect, general contractor, construction manager, various specialty trades each with their own project manager and more. In large commercial projects, the ultimate responsible party for the overall project is either a Construction Manager or General Contractor. They both have the same goal of completing the project to the satisfaction of the owner. However, there are some distinct differences between the two regarding their organizational structure, how they were selected for the project and their relationship with the owner.
Typically, the General Contractor is the individual or company that manages all aspects of the day-to-day activities at the jobsite. They are in charge of actually building the building. General Contractors have their own employees who typically fill the roles of project manager and Construction Superintendent. Often a GC will have some of their own laborers and carpenters who “self-perform” some work on the project, however, General Contractors almost always utilize a variety of specialty subcontractorsc who complete 80-90% of the work. The GC serves as project manager coordinating the work of the subcontractors and serving as the liaison in communicating with the owner or architect on project activities.
General Contractors typically work under a Lump Sum or Stipulated Sum contract. With this approach, the GC is invited by the project owner to bid or quote on the overall project. The GC will review and analyze the drawings, scope of work and requirements of the project, collect quotes from a number of qualified specialized subcontractors for all of the work to be done, add their own overhead costs and submit a quote. The GC is then obligated to deliver the project as agreed for that price. Any savings that are realized become additional profit for the GC.
On the jobsite, the activities and responsibilities of a General Contractor and Construction Manager are essentially the same. The difference lies in the nature of the relationship and the structure of the contract.
Construction Management is generally a more collaborative relationship than that of General Contractor. As mentioned, with General Contracting, the construction company provides a competitive bid and then delivers a project for that amount. Any cost savings become additional profit for the GC. With Construction Management, the construction company works with the client from the earliest stages to advise and develop a budget for the project. The owner selects the options they prefer and the Construction Manager executes the project guided by that budget and based on an agreed upon fee. Cost savings are returned to the owners budget.