General Contractor vs. Construction Manager: Understanding the Differences

In this blog, we’ll dive into the differences between a General Contractor (GC) and a Construction Manager (CM), and explore when these two roles actually come together. If you’re curious about the distinctions between the two and how to approach each role effectively, you’re in the right place. 

Importance of Understanding Different Roles in a Construction Project

Understanding the distinct roles and responsibilities in a construction project is crucial for building a successful team. Every project starts by clearly defining what each team member is responsible for—and more importantly, what they are accountable for. The differences between a General Contractor and a Construction Manager are significant, but there are key aspects that should be a focus regardless of which role you play. Drawing from my experience at Elevate and as a General Contractor at LeanBuilt, I’ll share insights that can help you navigate these roles.

The Role of a Construction Manager

A Construction Manager acts as an advisor and overseer of the entire construction project. They work closely with the owner from the beginning—sometimes even during the design phase—all the way through to project completion. Their primary responsibility is to ensure the project stays within budget and on schedule.

Construction Managers typically work on a fee basis. They do not take on financial risk in the project but are hired to make sure it stays on track. Their responsibilities include:

• Planning and scheduling.
• Budget management and cost control.
• Coordination with engineers, architects, contractors, and subcontractors.
• Ensuring safety compliance.
• Assuring quality.
• Communicating with all stakeholders.

A Construction Manager may work as part of a construction management firm or as an independent consultant. However, it’s important to note that they are not necessarily the General Contractor.

The Role of a General Contractor

A General Contractor, on the other hand, is directly responsible for executing the work on-site with the trade partners or subcontractors. Unlike a Construction Manager, a General Contractor is a part of the financial structure of the project, meaning they own the risk. They are usually incentivized based on the success of the project, with their fee tied to performance.

The responsibilities of a General Contractor include:

• Hiring subcontractors.
• Procuring materials and equipment.
• Ensuring construction adheres to plans and specifications.
• Managing the construction schedule.
• Addressing issues that arise during construction.
• Ensuring compliance with building codes and safety regulations.

General Contractors are typically hired by the project owner or developer and work under contracts like lump sum, cost-plus, or guaranteed maximum price (GMP). Their role is essential in managing the day-to-day aspects of the construction process.

How a Construction Manager at Risk (CMAR) Contract Works

One interesting hybrid approach is the Construction Manager at Risk (CMAR). In this setup, the Construction Manager starts early in the design phase, helping the owner manage the project from preconstruction through to execution. If the Construction Manager reaches a guaranteed maximum price (GMP) agreement for the design, they essentially take on the role of the General Contractor, assuming the risk for the construction phase.

This model combines the best of both worlds: the advisory role of the CM with the accountability of the GC. I believe it’s the most effective approach because it ensures the party managing the project has “skin in the game,” which is crucial for accountability and successful project outcomes.

How to Lessen Risks in a Construction Project

One of the most significant risks in a construction project comes from segregating the design and construction phases. When the General Contractor is not involved in the design, it can lead to gaps in understanding and increased risk for the owner. A CM at risk approach helps to narrow this gap by involving the contractor in the design process, reducing the potential for miscommunication and errors during construction.

The Key to a Successful Construction Project

The key to a successful project is ensuring that the party running the project has planned it thoroughly, can bring all interests together, and has a vested interest in its success. Whether you choose a CM, GC, or CM at risk, make sure that the structure of your project includes all these components. On larger projects, you might involve both a CM and a GC. If so, it’s critical that they collaborate effectively and do not work at cross purposes.

Benefits of General Contractors That Do Self-Perform Work

Finally, I want to emphasize the advantages of General Contractors that do self-perform work. These GCs not only manage but also directly participate in the building process. The benefits include:

• Greater control over quality.
• Improved cost efficiency.
• Increased schedule flexibility.
• Enhanced expertise and problem-solving on-site.
• Better risk management.
• Competitive advantage.
• More knowledgeable builders within the organization.
• Increased profitability.
• Improved reliability and coordination on the project site.

I’m a strong advocate for GCs that self-perform because they bring an added layer of reliability and expertise to the project, leading to better outcomes for all stakeholders.