Concerns Putting Construction Management at Risk

Construction management (CM) generally relates to some degree of responsibility for reviewing or overseeing construction services. CM services are performed in a variety of ways and the scope of the work performed can be tailored to meet the needs of different owners depending on the type of project and delivery method.

More design professionals are offering construction management services, but determining professional and contractor liabilities associated with these constantly evolving services can be difficult. Those in charge understand construction management at risk and are constantly looking at ways of managing those risks.

Acting as a CM advisor on projects

Most jobs rely on three distinct types of construction managers. A CM advisor’s duties include serving as an advisor to the owner throughout the course of the project, providing pre-construction services such as estimating, scheduling and construction reviews, and coordinating the work of one general contractor or several prime contractors.

Duties of a CM constructor

Primarily, the construction team has three primary players: owner, prime design professional and construction manager. The CM constructor’s duties typically include:

  • Holding all subcontracts for construction
  • Being responsible for tasks of management as well as construction
  • Taking responsibility for the entire construction project, from permits, to bids and the job itself
  • Promising the owner a guaranteed maximum price, and
  • Assuming the same risks as a general contractor, including safety on the jobsite

The role of the CM agent

The third type of construction manager is a CM agent. Because laws prohibit many public agencies from delegating fiscal responsibilities, CM agents are used almost exclusively in private sector projects.

General risks to consider

Several areas of liability occur when providing CM services. If bids exceed a construction manager’s estimates, there is substantial risk of a claim. Also, because some construction managers conduct design and construction reviews, they may (along with the architect or engineer of record) be subject to suits involving design error.

Construction managers have substantially greater risk of being cited for jobsite safety violations by OSHA. They generally assume responsibility for developing or reviewing jobsite safety programs or procedures of contractors, monitoring safety plans, training or other safety requirements.

They may also have exposures arising from the selection of construction materials and risks may also involve failure to identify long lead-time procurement items. There are many other issues that put construction management at risk, which illustrates the need to be properly insured against any and all risks.

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