RE Construction Management Overview

Some statistics to note (according to our textbook published in 2005): approximately 80% of construction is privately financed and about 20% is funded through various public agencies.  Construction industry employment, when taking into account the production, transportation, and distribution of construction materials and equipment, represents about 12 percent of the total gainful employment in our country.

Major Players:

• The Owner: is the instigating party of the project
• Public owners: agencies of the federal government, local boards, commissions, authorities.  Public projects are built to meet a defined public need.
• Private owners: individuals, partnerships, corporations, or various combinations.  Most have structures built for their own use and others complete the structure to be sold, leased, or rented to others. 
• The Architect-Engineer: is the party or firm that designs the project ("architect-engineer" is a term only used in our book and this blog to refer to the design professional because most projects involve architectural or engineering design or combination of both)
• The Prime Contractor: also known as the general contractor, is the company that contracts with the owner for the construction of the project.
• The Subcontractor: is a construction company that contracts with the prime contractor to perform some aspect of the construction work.

Types of Construction:

• Residential: single-family homes, condos, town homes, low-rise apartments, garden-style apartments, and high-rise apartments.  Accounts for about 40-45 percent of new construction during a typical year (in 2005).
• Building: institutional, educational, light industrial, commercial, social, religious, governemental, and recreational.  Accounts for about 25-30 percent of new construction.
• Engineering: projects that are planned and designed by engineers, such as highway and airfield, heavy, and utility construction.  Accounts for about 20-25 percent of new construction.
• Industrial: projects associated with the manufacture or production of commercial products or services.  Accounts for about 5-10 percent of annual construction.

Financing:

•  By Owner
• Public: tax revenues, appropriations, or bonds.
• Private: typically is banks, savings and loan associations, insurance companies, real estate trusts, or government agencies
• By Builder-Vendor: is a business entity thats designs, builds, and finances the construction of structures for sale to the general public.
• By Developer: developer firm provides owner with project design and source of financing or developer provides design, finance and construction.

Contract System: prime contrator typically enters into a contract with the owner

• Competitive Bidding: typically awarded to lowest bidder; normally required by law for public contracts.
• Open bidding: use same proposal form, bids are opend and read publicly, "Hard Bid" approach.
• Closed bidding: no prescribed proposal form, no public opening.
• Negotiated Contract: owner negotiates a contract with a preselected contractor or small group of contractors.

Construction Contract Types:

• Construction Services Only: accomplishment of field construction only.
• The Single Prime Contract: entire project is awarded to a single prime contractor.
• Separate Prime Contracts: project constructed by several different prime contractors.
• Design-Build: both design and construction is contracted to a single firm.

Construction Management (CM):

• CM Agency: method of managing design and construction services
• CM At-Risk: project delivery of design and construction services

Licensing:

• Laws pertaining to construction: zoning regulations, building codes, environmental regulations, building permits, field inspections, safety and health regulation, and the licencing of contractors and of skilled workers in certain construction crafts.
• Licensing of contractors not universally required, but many states and local governments do require some or all contractors by licensed.
• License Bonds: Surety Bonds