The Construction Management (CM) Process and the Standard Duty of Care
by Frank V. Reilly, Esq.

In recent years, many public construction Owners have moved away from the traditional lump sum bid process, favoring the Construction Management format instead. As with any new process, there has arisen some misunderstandings surrounding this particular method of contracting. Many of these misunderstandings apply to the Architect's role.

Background on CM:  The CM process arose partly out of the "partnering" movement that the industry experienced in the middle to late 1980's. One main purpose of this process was to allow project Owners to choose contractors based on criteria other than merely price. By moving away from the lowest responsive, responsible bidder standard, it was hoped that the Owner could exercise a little more discretion in choosing their contractor. The goal was for the Owner to be free to choose the contractor that seemed the most willing and able to "partner" on the project, thus getting rid of the traditional adversarial relationship.

How CM Works:  Rather than bidding at 100% Construction Documents, preliminary design schematics are released, usually at 50% completion. At this stage, Request for Proposals (RFP's) are issued and Construction Manager (CM) is chosen.  The CM prepares an initial project estimate based on the 50% schematics.  If the project is over budget, the CM assists the Owner and A/E during the value engineering process. Once the project design appears to meet budgetary constraints, the A/E prepares the 100% construction documents.  At this stage, bid packages are developed and released for bidding to the Trade Contractors. Trade Contractors submit bids to the CM, and the lowest responsive, responsible Trade Contractors are chosen in accordance with Florida law. At this point, the CM replaces all estimates with actual bids and the Guaranteed Maximum Price (GMP) is established.

Two Common Misconceptions:

The A/E's Role and the Requisite Duty of Care:  Sometimes, the A/E might mistakenly assume that the CM process operates to relieve him of some design responsibilities for the project. This assumption is usually incorrect. On most CM projects, the A/E remains the sole party responsible for design responsibilities.  The A/E has the entire Scope of Work relating to preparation of plans and specifications, and the assumes requisite liability for damages associated with architectural errors and omissions. The standard duty of care on aCM project is usually the same as that on a traditional lump sum project for all parties, including the A/E. The Construction Management process is usually not intended to reapportion professional responsibilities, and rarely functions to lower the standards of professional performance.

Additional Costs Are Taken from the CM's or Trade Contractors' Contingencies: This
common misconception highlights a critical misunderstanding of the CM process. The CM usually performs their Scope of Work for costs plus a fixed fee, or the GMP, whichever is less. The Trade Contractors usually bid on a lump sum basis to the CM.  Therefore, any increases in the Trade Contractors' Scope of Work increases the CM's costs for the project. When costs rise, the CM must usually: (1.) reduce its fixed fee, or (2.) request an increase to the GMP via the Change Order process. "Contingencies" is an industry term often used to represent variances in estimated costs, they usually do not represent construction funds set aside to anticipate a party's failure to meet their professional duty of care.

If you have any questions regarding architectural errors & omissions, or the Construction Management process, feel free to give us a call at (954) 229-1008.