Construction Management Services from
J.P. Cullen & Sons, Inc.

As a commercially organic firm, Cullen has evolved over time by being responsive to market conditions, technical innovations, and client preferences. Our core services as General Wisconsin Contractor have expanded over decades to offer today's clients Construction Management Services, Integrated Project Delivery (IPD), Design-Build Partnering, and in ways we are still developing, Program Management.

As a delivery methodology, Construction Management (CM) is a professional management process consisting of a full span of services applied to building projects through the phases of planning, design, construction, and post-construction. It centralizes managerial control of the delivery process in order to attain project goals, as well as manage the quality, cost, time, and scope of the project.

A professional CM can enhance the owner's staff with pre-planning, design, construction, engineering, and management expertise that can yield the greatest delivery efficiencies.  Comprehensive management at every stage of the project, beginning with the initial concept and project definition, also delivers the best possible set of benefits to owners.  There are two types of construction management, both which execute a project by overseeing the entire construction process.

Agency Construction Management Services

Agency CM is an arrangement where the CM acts as the owner's principal agent in the management of a construction project while the architect does similar for the design phase.  The owner holds separate contracts with the architect and CM, and will sign individual contracts with each subcontractor. The CM is usually not allowed to self-perform, that is, employ their own capabilities as a general contractor would.  The CM contract is awarded on a selection basis, with input by the architect or consultant who might help the owner vet an appropriate CM. Selection is most often grounded on construction experience and expertise, rather than by bid, and arrived at during the earliest phase of the project. This allows the CM to provide preconstruction services during the design phase to balance time, cost, quality, and project scope factors, offering the owner an early estimate as well as giving the architect timely constructibility feedback.

The CM represents the interests of the owner/project in its dealings with other construction professionals, and with other private and public entities. And though the CM may offer a list of prequalifed (sub)contractors for the owner's use, and may even assist the owner in the trade bidding process, final selection is by the owner, who holds multiple prime contracts with all project entities. Nevertheless, the CM is responsible for project delivery that is on-time and within budget, though they have no contractual responsibility with other trade contractors.  Projects can be fast-tracked, where construction begins through bid packages before design development is complete.

The advantages to Agency CM include:

• Central management of the project's scope of work
• Integrated talents of design and construction firms
• Early estimating, plus value optimization of budgeted funds
• Preliminary scheduling with multi-phasing for fast-tacking a project
• Minimization of schedule delays, change orders, and disputes
• Enhancing architectural design and construction quality
• Maximum flexibility in subcontracting and material procurement

Agency CM is negotiated construction management, where selection is driven by past project experience and achievement and not solely by fees. The final negotiated contract fee is reached by consensus between owner and CM for fees and general conditions, though actual final project cost cannot be ascertained until all packages are bid.  Here, the architect serves the owner in an advisory role. Development of design and budget eventually lead to a professional guarantee early in the project. The guarantee typically states that if the project bids in over the budget, the CM will work with the architect to reduce the cost of the project. It does not guarantee a maximum price, only that any anticipated budget over-runs will be diligently reduced by CM working through value engineering with the architect. Clients will often use Agency CM to fast-track their project.  Most often, if the CM is a general contractor, they are excluded from bidding the work. And generally, project cost might be higher with the owner holding multiple prime contracts.

The disadvantages to Agency CM include:

• Another layer of management added
• Owner burden of having to manage many contracts for a single project
• Third-party liability in the event one prime trade contractor damages another
• Final cost not established until all packages are bid
• CM not allowed to self-perform project work
• No GMP (that is, no single, warrantied, bonded price for the total project)
• Cost can be higher with multiple contracts

At-Risk Construction Management

At-risk CM is a delivery method which entails a commitment by the construction manager to deliver the project within a Guaranteed Maximum Price (GMP). An owner's main objective will here be to select the best CM for the project at a fair and reasonable fee. The owner will, normally, issue a Request for Proposal (RFP) to several firms, evaluate,  then interview those few that were short-listed. The owner will select a fee-based firm to manage construction before the design phase is completed. The client evaluates the CM using criteria such as price, reputation, quality of services, past relationship with client, ability to comply with regulatory laws and requirements regarding underutilized/minority businesses, etc. Typically, the owner/client negotiates the CM's fee and the terms of the contract. In some cases the fee may be part of the CM's written proposal or requested separately during the selection process, perhaps at the interview. However, the client isn't required and should not feel compelled to accept the lowest fee. Ideally, selection occurs at the project's beginning (before or just after selection of an architect).

The CM becomes a collaborative member of the project team, holding a prime contract with owner—as does the architect. Preconstruction services offered by the CM include budgeting, cost estimating, scheduling, constructibility reviews, and value engineering studies. As construction drawings progress or near completion, the CM divides the project into appropriate scopes of work for bidding, prequalifies subcontractors, and takes bids or accepts proposals for the work. The CM, architect, and client review bids and proposals for compliance with the contract documents and determine which ones to accept. When evaluating, they are not required to select the lowest bids, but there should be clear explanations if they do not, particularly if they have prequalified bidders. The CM then prepares cost estimates for the unbid portion, adds a contingency and a budget for General Conditions construction items, provides a GMP and a bond, and manages construction as a general contractor would. In some states, such as Iowa, a general contractor's license may be required. Delivery occurs through an open book process, where the CM tracks all the costs for the owner and architect to review.

The CM provides the client with a performance and payment bond. The CM will also require bonds from major subcontractors.  The CM&S217;s contingency belongs to the CM if it is needed but is returned to the client if it goes unused. It is a stated line item within the GMP that reflects the incomplete nature of the drawings and specifications which limits the CM's ability to predict the cost of unbid work with absolute accuracy. It may also cover unanticipated costs that arise during construction. The more work that is actually bid at the time the GMP is given, the smaller the contingency can be. On the other hand, the client&S217;s contingency is for changes that the client inevitably will want to make during construction. The CM's contingency lies within the GMP; the client's contingency outside the GMP.

The CM at Risk contract is a cost-plus-a-fee contract with a guaranteed maximum. It is the sum of the CM's fee, the CM's contingency, the General Conditions construction, all the subcontracts, plus an estimate for unbid subcontracts. The CM agrees to pay for costs that exceed the GMP and are not a result of changes in the contract documents. The GMP is subject to adjustment if the client or the architect makes changes. If the CM gives a GMP prior to the completion of construction documents, and if items not logically implied by the GMP documents are later added to the construction, the CM may increase the GMP.

With a construction management at risk contract, the owner is hiring a general contracting firm to perform services and deliver results, working for a percentage or fixed fee. The general contractor provides leadership to the team, which is composed of the owner, architect/engineer and construction firm. Under this arrangement, the CM would likely request separate bid packages from individual trade contractors (electrical, plumbing, masonry, flooring, plastering, painting, etc.), and this CM — not the owner — would be responsible for any problems that might arise with the subcontractors. In order to self-perform, the CM is usually allowed to bid on a limited basis, sometimes determined by the owner in concert with his/her representative (i.e., owner's representative). The best bid will be awarded the work and supervised by the CM.

The CM serves as consultant to the owner in the development and design phases, but as the equivalent of a general contractor during the construction phase. The CM works with the architect to develop the estimate of the design; however, the GMP is provided by the CM, who then receives proposals from and awards contracts to competing subcontractors. When a construction manager is bound to a GMP, the most fundamental character of the relationship is changed. In addition to acting in the owner's interest, the construction manager also must protect their own firm, which is now assuming a great deal of construction risk, because the owner will not pay more than the GMP. Typically, the owner will also have any savings returned to them.

The advantages to CM at Risk are:

• CM selected for quality rather than lowest bid through formal proposal process with interviewing
• Early involvement in estimating and constructability
• Owner selects architect and CM separately, holding separate contracts
• Owner can be involved in subcontractor selection process
• All work is bid, except for CM fee
• CM can bid and self-perform work won
• Single source accountability: CM holds all subcontractor agreements
• Fast-tracking capability that saves time
• Very useful delivery model for large/complex projects
• GMP
• Savings returned to owner

The disadvantages of CM at risk are:

• Negotiated CM fee is not competitively bid
• Cumbersome for small projects

At J. P. Cullen we offer full construction management capabilities in the States of Wisconsin, Illinois, and Iowa, including specialized divisions for industrial, steel, concrete, and masonry. 

Call 608.754.6601 for more information on how Cullen can manage your construction project.