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Construction manager vs. general contractor: What’s the difference?

When it comes to construction, the number of job titles and the duties they perform can make your head spin. You have contractors, general contractors, subcontractors, construction managers, site managers, project managers, superintendents, and more. The most confusing part of it all is that many people who hold these titles can perform the same work. However, their job title relegates them to a particular task, as stated in the building contract.

Two of the most commonly confused construction roles are the construction manager and the general contractor. Both are experienced in the construction industry and manage day-to-day work. However, there are some critical differences between the two.

Builders going over blueprints
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Construction management vs. general contractor

There are many similarities between a general contractor and a construction manager. In certain instances, the construction manager will act as the general contractor. They both have the knowledge and experience to complete a project from start to finish. Both are involved with the hiring and overseeing of subcontractors.

There are many key differences between a general contractor and a construction manager. The notable differences between the two are pay-out structure, owner involvement, building liability, and credentials/certifications.

Pay-out structure

If a general contractor is overseeing a building project, they call the shots. In this scenario, the owner is typically more hands-off. After the design phase, the general contractor gives the owner an overall bid for the project. This quote comes after they get estimates from their subcontractors. The general contractor then marks up these estimates and delivers one lump-sum bid to the owner.

With a construction manager, there are multiple payments throughout the building process. A fee goes to the construction manager based on the build’s overall estimated cost and time frame. It’s typical that a construction manager charges 10-15% of the general estimate. So a $150,000 project would incur a construction management fee between $15,000 and $22,500. As construction progresses, the owner pays off subcontractors as the jobs are completed.

Owner involvement

When a general contractor is in charge of the build, owners don’t typically have a say in who they hire as subcontractors. Usually, that’s the advantage of going with a general contractor, because you trust their work and the subcontractors they partner with. General contractors can take complete control of the design phase or come in and work off pre-designed blueprints.

With a construction management contractor, it’s best to look at them as a building advisor. Construction managers are, more often than not, involved in the design phase. The owner can be as involved or as uninvolved as they wish to be. They can work with the construction manager to pick out materials, offer design suggestions, and even supply the labor. The construction manager plans out every phase of construction and manages subcontractors, which the owner hires directly.

Usually, a construction manager has many connections with subcontractors and makes suggestions to the owner. Sometimes the owner has specific subcontractors in mind that they want to work with. Regardless of the reason, this method of hiring subcontractors cuts out middle people and markups one would experience with a general contractor. However, the construction manager’s fees might cancel out those savings.

Building liability

Perhaps the most significant difference between a general contractor and a construction manager is who is to blame if something goes wrong. A general contractor is, by law, responsible for what is agreed upon in the building contract.

A construction manager ultimately is not liable for work performed since the owner hires the subcontractors. So, if there are disputes after construction is complete, the owner has one person to go to when they hire a general contractor. There could be multiple builders to track down and seek resolution from when using a construction manager.

Construction manager discussing a project
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Since general contractors are held liable for their work, they are more heavily regulated by the states in which they work. Although general contractors aren’t required to have one, a bachelor’s degree in a construction-related field is a sign of a more reliable general contractor. Many (but not all) states require a business license, trade-specific licenses, and that they pass a certification exam.

Construction managers technically aren’t required to have any sort of certification or educational background. However, in almost every instance, a reputable construction manager has a bachelor’s degree in construction management or related field and has passed the Certified Construction Management exam created by the Construction Management Association of America. To take the CCM, a person must have a bachelor’s degree and at least four years of construction work experience (or eight years if no bachelor’s degree).

In closing

In the end, as an owner, whether you decide to hire a general contractor or a construction manager depends on how involved you want to be in the project and how quickly you need it done.

Employing a construction manager allows you to have a higher level of involvement, which can mean opportunities for cost savings, allowing the construction manager to focus on management and building deadlines.

Hiring a general contractor means you’re an owner with a hands-off approach to the project. You should trust the general contractor to bid fair prices and you trust the team is competent. A general contractor also guarantees that a single person is liable for the overall project. However, doing your due diligence and hiring an experienced construction manager with recommendations helps ensure things run smoothly.

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