General Contractor/Construction Manager – A New Trend in Public Works Contracting

The General Contractor/Construction Manager (“GCCM”) method, sometimes referred to as Construction Manager/General Contractor (“CMGC”), is an alternative approach to the customary prime contractor procurement process.  In the traditional approach, owners aim to have a complete project design finished when general contractors begin bidding.  Under the GCCM approach, however, owners hire a contractor during the early design stages.  This contractor takes on the role of construction manager during design development, project planning, and budget creation.  When the project is almost ready to begin construction, the owner and contractor negotiate a “guaranteed maximum price” for construction services, and the construction manager becomes the general contractor.  Unlike the competitive bidding procedure used in traditional contracting, owners using the GCCM method often make their selection on the basis of qualifications, such as experience or personnel, rather than price.

There are many ways the public can benefit from the use of GCCM programs.  Because the contractor is involved during the entire planning and construction process, these projects often see better budget control, fewer change orders, and time-saving outcomes.  Nevertheless, the GCCM method is not without faults.  The GCCM engagement process is far more difficult, so more experienced GCCMs tend to win the contracts.  The proposal process is lengthier and requires more staff and time to complete.  Additionally, because there is a high risk of failure with inexperienced teams, it is hard for smaller construction firms to break into the GCCM business.

How is GCCM/CMGC different in nearby states?

In Oregon, the CMGC process is flexible.  Effective July 1, 2014, elements like subcontractor selection/approval and allowance of self-performance may be freely contracted between the parties.  There will be no oversight body deciding the amount of CMGC contracts allowed.  Although parties have flexibility in drafting an agreement, there will be strict requirements about what information must be included in the contract.  For example, the contract must identify what areas of work the CMGC may self-perform without competition, including the work of the job-site general conditions.  Alternatively, the contract may include a process for the contracting agency to approve of the CMGC’s self-performance.[i] If CMGC is used for a public improvement contract over $100,000, the agency will need to prepare a formal post-project evaluation.  This evaluation describes project financials, a narrative of successes and failures, and an objective assessment of the use of the alternative contracting method.[ii]

In Washington, the GCCM process is strictly limited to contracts for particularly complex projects, buildings with historical significance, projects with specific design needs, or for facilities that must remain functional during construction.[iii] The process is overseen by both an advisory board and a review committee.  The committee certifies public owners that are authorized to use the GCCM process at their discretion and approves individual GCCM projects performed by non-certified bodies.  When the value of a subcontract is anticipated to exceed three million dollars, GCCMs may use an alternative selection process for the mechanical or electrical subcontractor with the approval of the public body.  RCW 39.10.385 outlines additional notice and hearing procedures for this process.

In Idaho, the CMGC process may only be used for highway construction projects.[iv] For each proposed CMGC project, an evaluation committee is designated to determine whether awarding the CMGC contract will serve the public interest and would be superior to the traditional bidding process.  The committee must include at least five members who are qualified by education and experience.  No more than 20-percent of the Idaho Transportation Department’s annual highway construction budget for improvement may be used for CMGC contracts.  Additionally, no less than 30-percent of any CMGC contract awarded must be self-performed by the CMGC firm awarded the contract.

[i] OAR 137-049-0690

[ii] OAR 137-049-0620

[iii] RCW 39.10.340

[iv] IC 40-905

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