Working with Your Contractor or Construction Manager

In order for the construction process to run smoothly, it is important to have a good working relationship with your contractor or construction manager. This document will explain how to select the right person for your project, how to establish a contract, and the associated costs you can expect to pay.
Introduction
Let’s start by differentiating between contractors and construction managers. Simply put, a general contractor is better suited for smaller projects or ones in which the owner or client has either gone through a separate design process, put the entire contract out to tender and is ready to hand it over to a general contractor (GC) who provides the lowest bid or is someone whom the owner has a lot of faith and trust in and is prepared to walk away and return when the job is finished. This model may involve a loss of control over the construction process, expenses, potential savings and information.

For projects that are medium to large and complex, construction managers (CM) provide a variety of skills and services that are available on a continual basis. Allowing the construction manager a seat at the table from the outset of design development is key to integrated design development. CMs use their GC skills to develop schedules, prepare estimates, analyze alternative designs, advise about construction techniques and perform value engineering. The difference is that they are doing this as part of the team and will coordinate and communicate with the team throughout the design and construction phases. This is a clear advantage to arriving on the scene after the design is complete and packaged up and a stipulated sum has been set through the bid process.

A word of warning: the reason for hiring a CM over a GC is to allow you to retain control over project development. Sometimes, CM project managers have a GC background and slip into GC behaviour, making decisions without consultation with the client or architect. Don’t allow this to happen.


Selecting a Great Contractor or Construction Manager
As with the architect, a Request for Qualifications (RFQ) and Request for Proposals (RFP) process or some combination of the two, with interviews, is appropriate. You want to hire someone who is honest and ethical. This can be a tall order in a field where negative stereotypes abound and where, frankly, ample opportunities exist to fiddle with costs. Make sure you check GC and CM references carefully and encourage candid conversation with former clients. Visit the following websites for further reading on how to hire a construction management firm or an argument for choosing a CM over a GC.

If construction requires environmental sustainability, LEED or other institutional environmental sustainability certification as a goal of the project, make sure that your GC or CM has experience with green construction projects. They will be required not only to use green construction techniques, but to keep detailed records regarding demolition, disposal, techniques and materials used. They should have project managers and site superintendents who are LEED AP (Accredited Professionals).


Contract Approach
Once you have found a great contractor or construction manager, you will need to find a contract approach that suits your project and budget. There are a number of ways to contract the job with a CG or CM. You may, for instance, pay a CM’s costs for estimating, attending meetings and other design/pre-construction stage activities, then tender the entire project and convert to a stipulated sum contract (CCDC2) with the same firm or (less advantageously) a GC.  Construction Specifications Canada provides a variety of contract options, including one in particular that provides a lot of flexibility, the CCDC 5B.
 

Costs Paid to the Construction Manager
When you are working with a CM who has hired a number of sub-contractors (or trades) selected by a tender process and you have signed a stipulated sum contract (CCDC2), be mindful that there are still a few categories of costs that are paid to the construction manager, such as:

  • General conditions: these are the entire personnel, material, rental and service costs that are assumed by the CM for the duration of the project. They will include things like site superintendent and other staff, office equipment and services, site trailer, etc. Make sure that you are provided with the back-up for everything in the general conditions if your contract allows you to recover what is not expensed in this category.
  • Allowances: This is defined work that is not tendered in a bid process and may be done by the CM’s own forces or by others hired during construction. It is a placeholder in the budget. Obviously, you don’t want to have a lot of these, but some are inevitable. Again, you need to review the back-up for these expenses for recovery where available at the end of the job.
  • Change order trade mark-up and fees: Changes in design during construction, whether initiated by the owner or by the architect with the owner’s agreement, will generate change orders, i.e. separate specific cost agreements. They will include mark-ups from the trades and the CM. Make sure those mark-ups are based on a ceiling in the contract.
  • Fee: This will be a percentage of the construction costs which should be established at the outset and contracted. It can be a consideration when hiring the CM.
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