Construction Manager Liability Still Awaits an Answer From Our Courts

The question of liability between general contractors and construction managers has existed ever since construction managers were introduced into project delivery systems. Each participant in a construction project has one or more contractual relationships, each of which identifies its contractual rights and duties. Typically, the construction manager and general contractor have no contractual relationship and therein lies the legal problem. While construction managers certainly play a role in each participant’s work, the recurring issue is whether a construction manager has a common-law duty to the various participants in the construction process. Although the question is common, the issue has not been definitively ruled on by the New Jersey courts.

When a construction manager is hired by a project owner to act as its agent or advisor, he typically does not enter into contracts with the general contractor, prime contractors or design consultants. Rather, he might be hired by an owner to assist in scheduling, cost control, construction and preconstruction project management, the bidding process and coordination. See Construction Law Handbook , Cushman & Myers at p. 348. Construction projects are known for their contractual pyramids. In claims for unjust enrichment on a construction project, the prevailing law in the state of New Jersey is that one cannot look beyond the party with whom it has privity for liability because the courts have held that such a process would wreak havoc on the construction industry. Similarly, in recognition of the interplay among the many participants of each project delivery system, most construction contracts specifically preclude the possibility of the creation of any third-party beneficiary rights. The same theories concerning the interplay among participants on a construction project apply between prime contractors and a construction manager on a multiprime project. Under ideal conditions on a construction project, even though the general contractor and construction manager do not have a contract, they will attempt to properly coordinate with each other to complete the project in a timely manner. However, where the construction process fails, a general contractor may believe that the construction manager, which it relied on for coordination or scheduling, and with whom it had daily interaction, is more to blame that the owner with whom it has contractual privity.