construction management: at risk. project management structure: contractual relationships owner...
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Construction Management: At Risk
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PROJECT MANAGEMENT STRUCTURE: Contractual Relationships
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CM At-risk Delivery Method • CM is committed 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
(Preconstruction Services),
• After preconstruction services, the CM then acts as the equivalent of a general contractor during the construction phase.
• In addition to acting in the owner's interest, the construction manager must manage and control construction costs to not exceed the GMP, which would be a financial hit to the CM company.
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The Project Manager (Owner’s Representative)• The Project Manager is the sole conduit for
communications between the contractor and owner.
• All orders issued to the contractor must be done through Project Manager (not from owner)
• This procedure avoids conflict & confusion
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Duties of the CMThe Construction Manager oversees items such as:
• documentation requirements for changes, etc.• planning & scheduling• payment administration• change orders & scope of work modifications• dispute & claim handling• punch-list inspections• administrative close-out
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Project Manager May Delegate Responsibility To A Resident Field Engineer
• On site on a regular basis.• Works closely with contractor• Inspection & quality control/assurance• Accepts/rejects materials • Oversees field testing• Prepares “as-built” drawings• Involved in change order process• Provides status reports to PM
• **Must keep PM informed on a daily basis of project issues
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Responsibility and AuthorityResident Field Engineer
• Eyes and ears of the ACM• Decisions are required on a daily basis• Must have SOME authority to make necessary on-site decisions
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Resident Field Engineer may be granted “Limited Authority”
• This allows the Resident Field Engineer to make decisions without the authority to:
• Make contractual changes• Cost or time changes• Scope of project changes• Waive legal rights of owner
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Delegation of Authority By The Resident Field Engineer
• The Resident Field Engineer may delegate some authority to an inspector
• Ie. Approval of workmanship or materials
• Inspector does NOT have authority to:• stop project operations• to approve deviations from the plans & specifications• to direct work
**Discussions should be with superintendents & not directly with workers.
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How is Authority Delegated Legally?
The Agency Relationship
• This relationship is established when one party designates another party to act on its behalf.
• An “agency relationship” is established between an owner and the Resident Field Engineer.
• Owner is legally bound by the acts of its Resident Field Engineer.
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THERE’S A GLITCH!
Apparent Authority –
• If the owner allows another party to act with the APPEARANCE OF AUTHORITY
AND
• If the contractor has reasonable belief they are dealing with a duly authorized agent
• Owner will be held accountable for the acts of the “apparent” agent
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THERE IS A DIFFERENCE BETWEEN SUPERVISION & INSPECTION!
** Note: Often, the word “supervision” is connected with field inspection.
• Legally risky term and should be discouraged by all professionals in the construction industry.
• In the case of U.S. Home Corp. vs. George W. Kennedy
Construction Co. [610 F. Supp. 759 (D.C.III.) 1985] a federal court ruled that if a project owner agrees to “oversee” or “supervise” a contractor’s performance of the work, the owner may share responsibility for defective work performed by the contractor.
• Therefore, the owner simply “inspects” the work for compliance with the plans and specifications.