Construction Management Organization North America

Regional Market Outlook Construction Management Organization

Category Definition – Construction Management

Construction management is a project delivery method that involves overall planning, coordination, and control of a project from inception to completion, aimed at meeting client's requirements. This is done to produce a functionally and financially viable project, which will be completed on time within authorized cost and to the required quality standards.

CM as an Agency (for fee)

• It is a professional service that can be applied to all delivery systems where the CM acts as the owner's principal agent in the management of a construction project planning, design, construction, and post-construction phases, or portions thereof
• The functions performed are as follows:
• Optimum use of available funds
• Control of the scope of work
• Project scheduling
• Optimum use of design and construction Firms' skills and talents
• Avoidance of delays, changes, and disputes
• Enhancing project design and construction quality
• Optimum flexibility in contracting and procurement

CM at Risk

• It is a delivery method, which entails a commitment by the construction manager to deliver the project within a Guaranteed Maximum Price (GMP). The construction manager acts as a consultant to the owner in the development and design phases, but equivalent of a general contractor during the construction phase
• In this method, the construction management company acts toward owner's interest, and the construction management company also tries to protect itself
• Apart from the basic CM services, these firms may also take care of additional requirements, like equipment installation, etc at an additional cost

Hybrid Model

• It is a delivery method, which is a combination of the construction management services for fee and at risk models. The CM firm and the client based upon on the level of trust on each other and the mutual agreement between both the parties share the risks associated with the project between them
• This might prove a disastrous decision, in case the client does not have any the prior experience in executing these projects, and if there is a clash in the roles of both the parties involved

Construction Management – Trends

Build up expertise (Build an effective team through collaboration between in-house and external CM teams)

Outsourcing Trend

• Project owners/clients have downsized their in-house project/construction management, in order to reduce overhead costs of maintaining full-time employees.
• Outsourcing maximum of the operational and non-technical work is the increasing trend.

Industry wise

• Senior Project Managers are at a global level for most firms. For complex/high-spend projects, senior PM is allocated on project-by-project basis, depending on the size and complexity of the project.

Project Location Spread

• If the client has several projects in different locations, global 2–3 global CM are hired, and for each facility, a Construction Manager is hired. Else if the client has higher presence in one or two locations with large spend/presence, then senior PMs are on a plant-by-plant basis.

Complexity of Work

• Small construction work and refurbishment work are managed in-house. For complex projects, a risk management firm or project control firm is hired, rather than the full spectrum of services.

Building a team

• Utilization rates for PM are calculated for the previous 3–5 year capex plan, and a team is built accordingly for the next 3–5 year capex plan. Clarity in project pipeline and region of projects for large projects help decide the size of the project management team. Preventative maintenance projects are managed by the in-house Construction Manager/Facility Manager. Reactive maintenance work is also managed in-house and a consultant is hired is expertise in a new subject is required.
• Small spend construction projects are awarded as a lump-sum design-build contract