What is the difference between hiring a Construction Manager (“CM”) and General Contractor (“GC”) for your project?
It is a question you may have in your hiring decision of your construction project. This article intends to shed some light on the similarities and differences between CM and GC. There are actually more similarities than differences between CM and GC, but keep reading to understand the major differences between them that can alter your decision making.
CM and GC both are task to assist you in constructing your project from start to finish. Project management is at the heart of their services to you. They are responsible for the project budget and project timeline. They need to ensure that the work being done is in accordance to the local building codes and the approved design. CM and GC communicate directly with local building inspector for work inspection purposes. So on the surface, both of them provide similar services to you. Yet their differences will tip you to lean one way.
The biggest differences are in terms of control and liability. CM is not legally responsible for the site safety, while a GC is fully responsible for everything and everyone involved in the construction process, hence the additional cost in insurance. The gap is widened considering that CM does not fully control the flow of labor and materials. A CM’s primary role is to manage the flow of labor and materials but CM does not provide the labor and materials. On the other hand, GC is in full control of the workers (direct or subcontractors) and of the materials. In fact, in a lump sum bid contract, a GC is liable to finish the work even if the contract price is not sufficient to do so (assuming no change in approved plans). In a scheme with CM, the cost overrun will go directly to the owner. Refer to the simple diagrams below depicting the work structure of a GC versus a CM.
And a simple summary formula for this comparison is:
GC = project management + payment + liability + actual work
CM = project management
Refer to the following tabular chart on the similarities and differences between GC and CM:
Now that some light has been shed on the matter, your decision comes down to your tolerance of hassle, time, and risk. If you, as the project owner, has the time and willingness to deal with the vendors and subcontractors and you are risk taker, then hiring a CM to manage your project should save you some upfront capital. Yet if you are risk averse and do not have the time nor the willingness to deal with multiple vendors and subcontractors, then a GC would be the preferable hire.
A simple summary matrix for your decision making is shown below:
Your project is in your hand. Choose wisely.