There are many similarities between a General Contractor (GC) and a Construction Project Manager (CPM) that it may be difficult to decide which one you need.
Deciding which professional you should hire will depend greatly on your project’s budget and your desired involvement level as the project owner.
Here's a breakdown of the roles a General Contractor (GM) plays -vs- a Construction Project Manager (CPM):
TIMING - A General Contractor (and traditional On Your Lot Builders) may or may not get involved in a project until after the permitting phase is complete – that is to say, when the architectural and engineering plans have been finalized, the lot cleared and your permits are in hand. Whereas a Construction Project Manager starts the process from the very beginning and assists the project owner in choosing a floorplan, getting blueprints that are ready for Washington State permitting, filling out permit paperwork for the county, coordinating land clearing and so much more.
BUDGET - A General Contractor is typically hired based on their bid for a completed build and they charge Cost + 20-30% of the overall build cost. Or they look at your floorplan and give you one lump price for the bid and it typically includes what their cost will be plus 20-30%. For example, if your Cost to Build is $500K then you can expect to pay a GC an additional $100K-$150K on top of that. Also, as the build progresses there may be changes to the timeline and budget resulting in more money due to the GC for their services (read the fine print of your contract). A Construction Project Manager is hired based on one flat fee (ours is $19K) so it doesn't benefit a CPM at all if the project goes over budget. It actually hurts a CPM if it does because their reputation of keeping a project on budget is on the line.
INTERIOR DESIGN - Many times a GC will have you choose from a set design. Which one.. 1,2 or 3. If you don't like any of the finish samples they have, then they'll tell you to choose the least expensive option and then pay to have it changed out to what you want after the project is complete. However, a CPM, will manage the install of exactly the finishes you want from the very beginning. In fact, if you hire us as your CPM, we have a construction buyer on staff that will actually shop for deals on the finishes you like and you simply pay for them with the supplier directly, using our bulk discounts of course..saving you even more money.
HIRING CONTRACTORS - A General Contractor will either employ a crew responsible for some of the build and then subcontracts the rest out or they subcontract out the entire build. On the other hand, a Construction Project Manager will seek out bids from contractors for every aspect of the project and present them to you, the project owner, and you choose which contractors to hire. The contracts will be signed and the agreement is between you and the contractor directly. Both a GC and CPM has relationships with multiple contractors that they trust and are vetted. However, hiring a Construction Project Manager allows the project owner to hire a friend or family member or themselves to handle aspects of the build whereas a GC will choose which contractors will do all the work. If you want the option (and extreme cost savings) of doing some of the build yourself, then hire a CPM instead of a GC.
LEGAL RESPONSIBILITY - A GC is liable for anything that goes wrong on a build. For example, if a worker slips and breaks their leg, the GC's insurance foots the bill. If a subcontractor breaches contract then the GC is responsible for seeking restitution. (there's a catch to that. If a GC hired a subcontractor to do a job and the subcontractor does the job but the GC doesn't pay the subcontractor for any reason, like bankruptcy, you're still on the hook to pay that subcontractor. In some cases, this means that you'll pay double. If you don't pay the subcontractor, the subcontractor will put a lien on your home and you won't be able to get permanent financing until that lien is paid. Bummer! You just paid double.) Whereas, if you've hired a CPM to manage your build then your contracts and payments are made directly with the contractors, no middle man. But you'll also need to get insurance to cover the build if someone gets hurt, there's loss or theft, etc. That's an easy fix and as your Construction Project Managers, we work with several insurance companies ready to help you with that and it's not that expensive (aka $1500 or so). We also ensure that all contractors we recommend to you are licensed, bonded and insured themselves.
COST - A GC charges anywhere from 20-30% on the projects final bid amount. They may need to add to that as the project progresses because their bid didn't cover timeline restraints and/or material cost increases. A CPM has a flat fee that never goes up. The only price differences that you may encounter during the build is if materials or contractor prices go up. However, if your material or contractor bids go down, you benefit. Whereas, if you hired a GC, they would pocket that difference. An easy work around to ensuring you have enough money for the build if the costs do go up is to have a contingency amount set aside. If you're financing the build, the bank will require this as well and make sure it's in your loan amount. We love Timberland Bank and their owner/builder financing program because of this (and our clients are VIP's with them).
ON SITE -vs- OFF SITE - A GC has an onsite manager who spends the majority of their time on the job site whereas a CPM spends most of their time in the office and with the project owner. They will go to the job site once in a while but for the most part the project owner is the one who will do walkthroughs with the contractors. This is great for a project owner who wants a more hands on role in the build but not so good if you're out of town quite a bit or don't have time to grace the job site. However, our work around to this is to hire an onsite foreman to check your jobsite and the work being done. It will cost you $3K (a negotiated rate for our clients) to have this experienced set of eyes checking everything out and doing the walkthroughs with you.
As you can see there are pros and cons to both hiring scenarios. Which one you choose depends solely on your needs and ability to handle stress. Sometimes it's nice to hand everything over to a GC and not think about signing any other contracts but one, with the GC. They'll hire the subcontractors and you don't have to think about it. On the other hand, if you're capable of signing more than one contract and need help with your permit paperwork and site plan, then save the $100K + and hire us as your Construction Project Manager.
If you'd like more information on all that we'll do for you and your custom home build, click here or give us a call at (360) 940-3151.