Construction Manager vs General Contractor… What are the similarities between these project management entities? What are the differences? Which should you consider using for your next project if you are an asset owner?

If these are questions that you are asking yourself, you are certainly not alone.

Long story short, Construction Managers and General Contractors fulfill similar roles and duties on large-scale private or public sector projects. Both entities are typically seen as the “Head Contractor” or the primary facilitator of construction activities when hired onto a project by an asset owner.

However, there are some key nuances that differentiate these two entities. Read on to determine which you should be looking to hire depending on the scope of your next project!

construction manager vs general contractor: how project managers can improve their margins with myComply

What is a Construction Manager?

Construction Managers (or Construction Management firms) are professional service providers that act as an intermediary between project/asset owners and the construction contractors that perform work on the project. Construction Managers (CMs) are responsible for managing everything from the project’s schedule and cost all the way down to the day-to-day function of each subcontractor on the site.

Additional construction management responsibilities include:

  • Quality assurance
  • Ensuring site safety and regulatory compliance
  • Project management
  • Reporting progress to the project/asset owner

The Construction Manager is responsible for representing the owner’s interests and providing direct project oversight. Construction Managers are also accountable for hitting target project completion and target budget. This can be negotiated under any of the common construction contract types, be that fixed-price, cost-plus, or a time and materials contract.

What is a General Contractor?

A general contractor is much like a Construction Manager in the sense that act as an intermediary between the project/asset owner and the other contractors that are completing work on the project. In doing so, the General Contractor is hired by and is entering a direct or prime contract with the project owner.

Under this definition, construction firms that specialize in certain work (ex. Concrete) might typically classify themselves as subcontractors, whereby they are hired by a General Contractor to contribute to a commercial project. However, this same concrete company might, under some instances, act as a General Contractor if the entire scope of project work is concrete related, and they are hired directly by the asset owner.

Much like the Construction Manager, General Contractors are also responsible for ensuring quality, promoting site safety, adhering to regulation, project management, and providing detailed reporting to the owner. General Contractors can also enter several different contract formats, such as: fixed-price, cost-plus, or a time and materials.

Learn More: Construction Bids: How to Win More as a General Contractor

Construction Manager vs General Contractor: The Breakdown

Without further ado, here is the comparison: Construction Manager vs General Contractor.

Owner Relationship

Construction Managers and General Contractors have some distinct differences in the ways that they communicate and interact with the project or asset owner. Find out more below.

 

  Construction Manager   General Contractor
  • Works as an owner-partner and is often viewed as an extension of the asset owner when managing a project.
  • On certain commercial projects, a Construction Manager may hire a General Contractor as opposed to managing the day-to-day project operations first-hand.
  • Generally, Construction Managers work under a cost-plus contract whereby they earn a percentage of the total project cost. This is a much more secure revenue model than other alternatives and eliminates the competitiveness that is sometimes present in General Contractor/owner relationships.
  • Often selected based on track record or expertise, rather than estimated cost or bid appeal.
  • Procure projects through competitive bidding on traditional or digital platforms.
  • Act as third-parties in the construction process, following ownership and the design/engineering firm or team.
  • Negotiate a contract under a fixed-price, cost-plus, or time and materials payment schedule. However, fixed price with some allowances/insurances is the most frequented contract type in the General Contractor/owner relationship.
  • General Contractors tend to be more profitable when they can save time and money, so their relationship with owners tends to be competitive in nature.

Payment Structure

Managing and organizing payment for all project stakeholders is a key component of Construction Manager and General Contractor duties, however, there are some key differences to note.

 

  Construction Manager   General Contractor
  • As mentioned above, Construction Managers typically have much more secure income from the project/asset owner and tend to be paid via a cost-plus contract.
  • Unlike General Contractors who are paid by the owner, then required to redistribute payment to each subtrade, Construction Managers simply facilitate payment directly from the owner to the subcontractor.
  • Track, organize, and collect lien waivers from all project participants. Lien waivers are formal documents that confirm that a payment has been made and that the receiving party waves all future lien rights for the amount paid.
  • Are responsible for managing their own billing and payment from the project/asset owner.
  • Are often paid in bulk for a subset of project work and must then make sure that all subcontractors and suppliers that operate underneath them are paid.
  • Make the bulk of their profit if they can complete a project ahead of schedule or below budget, as difference between projected cost and realized cost will generally become profit.
  • Must also track, organize, and collect lien waivers from every single project participant.

 

Here is how the payment chain flows under the general contractor model:

general contractor payment structure

Source: Levelset

Organizational Structure

Construction Managers are more office-based and corporate in nature, whereas General Contractors tend to be much larger organizations with taller organizational hierarchies. Find out more here.

 

  Construction Manager   General Contractor
  • Construction Managers tend to have much more loosely defined organizational structures. Some Construction Management firms are individuals or small teams of people. Unlike General Contractors that specialize in some type of project work, Construction Managers rarely employ project staff. Instead, they tend to have experience or specialization in professional crafts, such as estimating and accounting.
  • A more typical business entity, comprised of executive leadership, middle management, and front-line employees. Specific roles can span everything from C-Suite to project managers and foremen/superintendents, all the way down to general laborers and skilled trades.
  • General Contractors tend to be much larger in nature and often tackle more projects simultaneously.

Work Duties/Responsibilities

The day-to-day operations of Construction Managers and General Contractors vary quite substantially. Find out more below.

 

  Construction Manager   General Contractor
  • Often enter the project much sooner in the process so that they can aid in the preconstruction process, including providing inputs on costing, features, specs, materials, and more.
  • Being that the Construction Manager tends to have a closer-knit relationship with the asset owner, these firms will often manage more intimate business, such as: document handling, bidding, and even owner administrative duties.
  • Other consulting style responsibilities might include troubleshooting jobsite issues, reviewing bills, reviewing change orders, helping with cost estimating and forecasting, managing permits and inspections, procuring technology, ordering, and negotiating materials discounts, and more.
  • General Contractors typically enter the project at the onset of the construction phase of development, meaning that they have much less input on design, materials, and other foundational project developments.
  • Predominantly act as project managers, overseeing the entire project and employing foremen, superintendents, and often laborers to manage subcontractors, complete work, and steer the project.
  • There is an important distinction to be made here: General Contractors can often act as Construction Managers, but Construction Managers rarely have the skills and expertise required to act as General Contractors, unless they started out as such.

Benefits to Project/Asset Owners

There are clearly some distinct differences between these two (often confused) entities. Below is a brief summary of some of the key benefits of each to interested project/asset owners.

 

  Construction Managers   General Contractors
  • Tend to have much more technical expertise as these firms are comprised of business professionals that hail from tertiary industries, such as estimation, project management, accounting, etc.
  • Earlier project involvement often allows Construction Managers to offer greater value with respect to achieving higher value in the end project result.
  • Longer project involvement often correlates with fewer change orders and less rework related activities throughout the course of a construction project.
  • General Contractors typically have existing networks of subcontractors with which they frequent on other project work. This can be a major asset to owners as it demonstrates a proven work record and generally means that the General Contractor and subcontractors have established repeatable operating procedures.
  • General Contractors often specialize in a certain area of work, being that most General Contractors graduate from subcontracting. For example, one GC might specialize in large commercial concrete work; making them a great fit if your project is an urban superstructure.

 

If you are the project/asset owner for a large construction project, you need to implement either a Construction Manager or a General Contractor (even both). Hopefully, this breakdown will provide the necessary insights to make an informed decision. 

Conclusion

Are you an asset owner, Construction Manager, or General Contractor? Are you looking for innovative technologies to enhance the productivity of your projects, improve safety, and drive margins? myComply is the solution that you have been looking for.

Here is how it works:

Credential Management

myComply makes it so that General Contractors and Construction Managers can issue certification and qualification requirements to every subcontractor that is scheduled for work on their project. From there, every worker for every subcontractor must upload necessary certifications (including expiration dates) to the myComply platform. This ensures that all workers on your project site are qualified to be performing their work and allows you to mitigate the risk of non-compliance related fines.

credential management with myComply

Site Access Management

Construction sites are chaotic. As a General Contractor or Construction Manager, you are responsible for overseeing the movement of anywhere from dozens to hundreds (or even thousands) of workers on a day-to-day basis. Ensuring that only certified/approved workers enter your sites can be impossible. myComply’s Smart Badges and Smart Bricks use near-field communications (NFC) and Bluetooth technologies to scan each worker as they enter the site, so you always know who is on your site, and when.

Detailed Reporting

With certification requirements and access control solutions implemented on your project site, you naturally unlock a wealth of data, and myComply makes it easy to access and leverage that data.

Access on-demand reports to showcase:

  • All worker certifications and project compliance data
  • Worker detail reports to showcase demographic data for banks, owners, and other stakeholders
  • Timesheet data to track worker movements and prevent labor inflation
  • Proof of vaccination (where applicable)
  • Local Law 196 reports (New York only)

If you are interested in finding out more about myComply, then check out our Projects Pro solution for Owners, Construction Managers, and General Contractors, or book a demo with one of our product experts.

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