This will be the first in a series of articles dealing with construction management agreements (CMAs). In this series, we will cover pricing, project scheduling, defects and failures, and insurance and liability. Our topic for today is the pricing of CMAs, including the fee of the construction manager (CM), general conditions (GC) costs, subcontract costs, contingency, and insurance. Where appropriate we will make distinctions between “cost-plus” and guaranteed maximum price (GMP) CMAs.

CM Fee

Generally speaking, the CM’s fee consists of two components: a preconstruction services fee and a construction phase fee. The preconstruction services fee covers the CM’s services (if retained during the design phase of the project) for working with the owner and its design team on such items as constructability, site logistics, subcontract and general conditions costs budgeting, and scheduling. The fee for these services can be based on a monthly fee, a fixed fee for the anticipated duration of the preconstruction phase or actual personnel costs. Often, owners will request a cap on these fees, which would be a function of duration. Owners may also ask that the preconstruction services fee be credited against the construction phase fee once work begins.