Construction management: when it pays and what are its advantages and limits

Construction management: when it pays and what are its advantages and limits

If you as an investor embark on a construction without a general contractor (GC), you will usually save 10-20% of the cost just by doing this. However, there are other benefits to well-done construction management (CMA), especially for complex construction projects or renovations.

In recent years, investors in construction projects have struggled with budgets due to rising prices for building materials and labour. It takes very little and the project gets dragged out, changed or even aborted.

Construction management is an increasingly popular tool for efficient construction implementation. In layman’s terms, this is an approach that leaves out the general contractor. The project will be divided into so-called. packages – functional and logically related units – and each work package is tendered separately.

Savings and responsiveness to change

By omitting the general contractor, the investor saves 10-20% of the cost depending on the type of project. Moreover, the investor avoids a “thick contract” with detailed documentation, according to which the entire project is priced and built. This is particularly advantageous for complicated projects that are difficult to plan at the beginning. If the project requires changes during implementation (changing the way the building is founded, adding a floor, etc.), it is not so easy with a contract with GD. And such changes are certainly not free.

In construction management, you sign a contract with an expert who coordinates everything, supervises the smooth running of the project and the individual activities (packages, stages) are contracted in stages.

Tendering packages of work in stages removes stress and the risk of wrong decisions. Instead of negotiating changes with the general contractor, you have room for value engineering or finding effective solutions with individual contractors.

Pressure on the general contractor

In our experience, construction management is also beneficial in situations where the investor trusts the traditional approach with a general contractor. This is because by requesting the services of a CMA, there is pressure on the quote from the potential GD contractor. When offers come together, it is up to the investor to decide what approach to take.

When construction management is useful and when it is not

Construction management is of interest to all investors who are dealing with the project budget. In our experience, it wins on complex projects and renovations. It is precisely in such situations that the investor is faced with a higher level of uncertainty (incomplete documentation, uncertainty about “what is hidden in the old walls”, etc.) and the great flexibility of the CMA comes in handy.

Construction management is also more demanding of bank financing. Most large banks are used to financing classic development projects with a general contractor, where it is on paper from the beginning how much the project will cost and when it will be completed. Construction management does not offer these guarantees as a matter of principle – in our experience the investment is usually cheaper and the schedule comparable to GD.

We will be happy to present our approach to you personally

If you are preparing an investment and are wondering how construction management could contribute to a faster return or smoother construction process, get in touch. We’d be happy to discuss this with you in a casual manner.

Do you manage projects in the construction industry?

Let's meet. We'd love to get to know you and your project.


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