Construction Management/Design-Build in Texas: Construction Management

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July 30, 2018

Agency construction manager
The construction manager acts as the owner’s principal agent to advise on or manage the process of the project from conception to completion.

Construction Manager at risk
The construction manager provides professional management assistance to the owner prior to construction and advice on constructability, budget and schedule coordination. During the construction phase, the construction manager converts to the equivalent of a general contractor.

Construction Management - Overview
Agency Construction Management (CM) can be used with any delivery method. As an agent to the owner, the CM owes a fiduciary duty to the owner throughout the project. In construction manager at risk the CM is responsible in the same capacity until construction phase.

Usually the construction manager at risk is used with Guaranteed Maximum Price (GMP) contracts. GMP contracts are essentially cost plus contracts with a guaranteed maximum cost. It is common that the GMP is set later in the project after the design has met a certain percentage of completion. Before the GMP is set, the CM at risk acts as a fiduciary for the owner. After the GMP is set, the CM at risk acts in the role of an independent contractor.

When CM at risk, owner should consider hiring another consultant to set the GMP and budget. After the CM switches to an independent contractor role, the CM is concerned about its profits, and not the owner’s. After the CM converts to a general contractor, the owner will need to hire other professionals or change the relationship with existing professionals. For example, costs of change orders and claims analysis will need to be performed by someone other than CM. Also, if architects and engineers have previously been overseen by the CM, that will no longer be acceptable.

Suggest that an Compensation for a CM is usually in one of the following forms:
•    Direct salary times a multiplier. The multiplier is based on the CM’s indirect costs and overhead.
•    Billing rates based on the job classification plus amounts added for indirect and overhead costs.
•    Cost plus profit. Again cost is salaries plus indirect and overhead costs.

Typically CM activities during pre-construction:
1) Develop a Project Facility Program along with Project Team;
2) Manage the design of the project;
3) Make recommendations on construction feasibility, long lead times on materials, preliminary budgets, cost savings;
4) Implement a constructability program; and
5) Issue reports on constructability issues. Typical CM Activities

(a) General Coordination.
(1) Participate as a member of the Project Team in the development of-the Project Facility Program.
(2) Attend regular meetings with other members of the Project Team doing design development.
(3) Provide recommendations and information to the other members of the Project Team on: construction feasibility; availability of materials and labor; time requirements for installation and construction; assignment of responsibilities for safety precautions and  programs, temporary Project facilities; equipment, materials and services for common use of the Construction Manager and Owner’s separate contractors, if any; cost factors, including costs of alternative materials or designs, preliminary budgets, and possible cost savings; methods of verification for determining that the requirements and assignment of responsibilities are included in the proposed Contract Documents, and any other matters necessary to accomplish the Project in accordance with the Schedule (as defined below) and Project Construction Budget.
(4) Implement and conduct a constructability program.
(5) Develop and update a "Constructability Review" report.
(6) Creation and continuous updating of a decision tracking system in a format acceptable to Owner.
(7) Attend and participate in Owner’s “Partnering” Program for all phases of the Project.

(b) Scheduling.

(1) Develop a critical path Project schedule ("Schedule").
(2) Update the Schedule as is reasonably required but at least monthly.
(3) Provide the necessary critical path schedule control with a goal to attain the Substantial Completion of the Project on or before the date set forth hereinabove, so that the Owner can occupy and utilize the entire Project facilities on such date; and
 (4) Create and maintain the Schedule using the latest available version of the Primavera software program (the license and training for which shall be at Construction Manager’s sole expense).
(c) Budget and Cost Consultation.
(1) Obtain from Owner all Project service, materials and property costs and expenses not known directly by the Construction Manager, such costs to include, without limitation, Owner’s personnel costs, force account labor and special consultants.
(2) Prepare and update a Project budget during the schematic design phase, design development phase, and construction documents.
(3) Provide throughout the duration of the Project, updates of ongoing cost and budget impact, and provide continuous cost consultation services. .
(4) At the completion of the Construction Contract Documents (for any Stage of the Project), update and refine a comparison of actual and projected costs to the Project Construction Budget, and in the event such actual and projected costs exceed the original Project Construction Budget, develop and implement reasonable strategies to be approved by the Owner to reduce the costs projected to be incurred during all phases of the Project.

(d) Coordination of Design and Construction Contract Documents.
(1) Review all plans, specifications, and other design documents during the schematic design phase, design development phase, and construction documents phase, and advise Owner on site use, foundations, systems, materials, equipment, construction feasibility, availability of labor and materials, procurement time requirements, installation and construction, relative costs, and provide recommendations to Owner without assuming Design Consultants’ professional responsibility.
(2) Coordinate the incorporation of the Owner's Design Guidelines and Standard Specifications and procedures.
(3) Assist in development of any Special Conditions of the Construction Contract Documents.
(4) At specified times required by the Owner, review the drawings and
Project Manual as they are being prepared, advise Owner of any error, inconsistency or omission discovered, and recommend alternative solutions whenever the design affects construction feasibility, budget, risks, or schedules (without assuming the Design Consultants’ professional responsibility).
(5) Prepare a constructability review report.
(6) Coordinate with the Owner to ensure that the Construction Contract Documents comply with all laws.
(7) Consult with Owner and Design Consultant to determine what\ materials, equipment, component systems, and construction types should be included in the Contract Documents.

(e) Construction Planning.
(1) Identify for and recommend to the Owner the need for purchase of items requiring extended delivery times.
(2) Review the Drawings and the Project Manual with the other members of the Project Team to eliminate areas of conflict and overlap in the work to be performed by the various Subcontractors or Owner’s separate contractors.
(3) Schedule and conduct pre-bid conferences with interested bidders, subcontractors, material suppliers, and equipment suppliers, and record minutes of same.
(4) Coordinate and develop with Design Consultant bid packages and work scope descriptions for each separate bid category that represent the entirety of the scope of the Work for each phase and stage of the Project.
(5) Advertise and solicit either competitive bids or competitive sealed proposals from trade contractors or subcontractors for the performance of all major elements of the work other than the minor work that may be included in General Conditions.
(6) Assist the Owner, the appropriate separate Owner’s contractor, the appropriate Design Consultant or other consultant, in obtaining all applicable risk management, code, and regulatory agency reviews and approvals for the Project or any portion thereof including, the Texas Department of Licensing and Regulation and the fire department providing fire protection.
(7) Refine, implement and monitor the HUB Subcontracting Plan which promotes equal employment opportunity in the provision of goods and services to the Owner for the Project.
(8) Advise Owner of any tests to be performed.

(f) Guaranteed Maximum Price.
(1) At the conclusion of the Design Development phase, or such other time as the Parties may agree upon when the Drawings and Specifications are sufficiently complete, Construction Manager shall submit a Guaranteed Maximum Price proposal to Owner which shall also state a Contract Time and date of Substantial Completion upon which the proposal is based.

Construction Manager Activities During Construction Phase

(a) Project Control.

(1) Shall construct the Work in strict accordance with the Contract Documents within the time required by the Schedule approved by Owner and as required by Owner’s General Conditions and Specifications. Construction Manager shall award and enter into, as a general contractor, all Subcontracts necessary and appropriate to provide all labor and materials for the construction of the Project. Construction Manager shall selfperform only General Conditions Work and other Work which has been warded to Construction Manager. Owner reserves the right to perform Work related to the Project and to award separate contracts for Work  related to the Project.
(2) Monitor the Work of the Subcontractors as required and coordinate such Work.
(3) Attend Owner’s Project progress meetings scheduled by Owner no less often that once per month, and fully advise the Project Team at such meetings as to Project status.
(4) Schedule, direct and attend regular meetings with other members of the Project Team during the construction of the Project to discuss jointly such matters as procedures, progress, problems and scheduling.
(5) Maintain a competent, full-time staff at the Project site to coordinate and provide general direction over the Work and progress of the Subcontractors on the Project.
(6) Establish on-site organization of personnel and clearly defined lines of authority in order to effectuate the overall plans of the Project Team. At a minimum, Construction Manager’s site personnel shall include a project manager, project superintendent, project engineer, and appropriate administrative support personnel.
(7) In consultation with Owner, establish procedures for coordination among the Project Team, Subcontractors, separate contractors, Design Consultants, and other consultants with respect to all aspects of the construction of the Project, and implement such procedures.
(8) Expedite and coordinate delivery and installation of Owner-procured material and equipment.
(9) Supervise and direct the Work and be solely responsible for construction means, methods, techniques, sequences, and procedures for the Work.

(b) Scheduling.
Provide regular monitoring, updating, and reissuing of the all Project Schedules as construction progresses, including, without limitation, master Project schedules, detailed construction schedules, submittal schedules, inspection schedules, and occupancy schedules

(c) Change Orders. Develop and implement a system acceptable to the Owner for the preparation, review and processing of Change Orders, change order requests, and requests for information, in accordance with Owner’s General Conditions and Specifications.

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(d) Wage Rates. Maintain strict enforcement of State of Texas prevailing wage laws in accordance with Owner’s General Conditions. Cooperate with Owner in monitoring the submission to the Owner of payroll records by the various Subcontractors when requested.

(e) Documents, Shop Drawings, and Submissions.

(1) Request such interpretations from the Design Consultant, with Owner consent, from time to time in order to facilitate the Construction Manager's accomplishment of its duties under this Agreement.
(2) In collaboration with the other members of the Project Team, establish and implement procedures for expediting the processing and Design Consultants' approval of shop drawings and other submissions, and in accordance with Specifications, as applicable. Receive from the Subcontractors, and review, all shop drawings and other submissions for conformance with the Contract Documents. Coordinate shop drawings and other submissions with the Contract Documents and other related documents prior to transmitting them to other members of the Project Team.
(3) Record the progress of the Project, submit written progress reports to the other members of the Project Team, including information on the Subcontractor’s Work and the percentage of completion, and keep a daily log of Project construction activities.
(4) Shall maintain at the Project site and make available to Owner, updated records of subcontracts, drawings.
(5) Coordinate and facilitate the creation of record and as-built drawings, and the procurement of warranties and guarantees.
(6) Provide Owner with complete, unaltered copies of all Subcontracts, and all amendments thereto.
(7) Submit to Owner all documents substantiating payments to qualifying HUB’s in a format designated by Owner.
(f) Safety. Be responsible for all safety precautions and programs in connection with the Work.

Construction Manager – Agent in Texas for Governmental Entities

All references to TEX.GOV. CODE:

Sec. 2267.202. CONTRACT PROVISIONS OF CONSTRUCTION MANAGER-AGENT. The contract between the governmental entity and the construction manager-agent may require the construction manager-agent to provide:
(1) administrative personnel;
(2) equipment necessary to perform duties under this subchapter;
(3) on-site management; and
(4) other services specified in the contract.
Sec. 2267.203. LIMITS ON CONSTRUCTION MANAGER-AGENT. A construction manager-agent may not:
(1) self-perform any aspect of the construction, rehabilitation, alteration, or repair of the facility;
(2) be a party to a construction subcontract for the construction, rehabilitation, alteration, or repair of the facility; or
(3) provide or be required to provide performance and payment bonds for the construction, rehabilitation, alteration, or repair of the facility. Sec. 2267.204. FIDUCIARY CAPACITY OF CONSTRUCTION MANAGER-AGENT. A construction manager-agent represents the governmental entity in a fiduciary capacity. Sec. 2267.205. USE OF ARCHITECT OR ENGINEER. (a) On or before the selection of a construction manager-agent, the governmental entity shall select or designate an architect or engineer in accordance with Chapter 1051 or 1001, Occupations Code, as applicable, to prepare the construction documents for the project.
(b) The governmental entity's architect or engineer may not serve, alone or in combination with another person, as the construction manager-agent unless the architect or engineer is hired to serve as the construction manager-agent under a separate or concurrent selection process conducted in accordance with this subchapter. This subsection does not prohibit the governmental entity's architect or engineer from providing customary construction phase services under the architect's or engineer's original professional service agreement in accordance with applicable licensing laws.
(c) To the extent that the construction manager-agent's services are defined as part of the practice of architecture or engineering under Chapter 1051 or 1001, Occupations Code, those services must be conducted by a person licensed under the applicable chapter.

Construction Manager at Risk in Texas for Governmental Entities

CONSTRUCTION MANAGER-AT-RISK. (a) In this chapter, the "construction manager at risk method" is a delivery method by which a governmental entity contracts with an architect or engineer for design and construction phase services and contracts separately with a construction manager-at-risk to serve as the general contractor and to provide consultation during the design and construction, rehabilitation, alteration, or repair of a facility.
(b) A construction manager-at-risk is a sole proprietorship, partnership, corporation, or other legal entity that assumes the risk for construction, rehabilitation, alteration, or repair of a facility at the contracted price as a general contractor and provides consultation to the governmental entity regarding construction during and after the design of the facility. The contracted price may be a guaranteed maximum price.
(c) A governmental entity may use the construction manager-at-risk method in selecting a general contractor for the construction, rehabilitation, alteration, or repair of a facility only as provided by this subchapter. Sec. 2267.252. USE OF ARCHITECT OR ENGINEER. (a) On or before the selection of a construction manager-at-risk, the governmental entity shall select or designate an architect or engineer to prepare the construction documents for the project.
(b) The governmental entity's architect or engineer for a project may not serve, alone or in combination with another person, as the construction manager-at-risk unless the architect or engineer is hired to serve as the construction manager-at-risk under a separate or concurrent selection process conducted in accordance with this subchapter. This subsection does not prohibit the governmental entity's architect or engineer from providing customary construction phase services under the architect's or engineer's original professional service agreement in accordance with applicable licensing laws.
(c) A construction manager-at-risk may seek to perform portions of the work itself if:
(1) the construction manager-at-risk submits its bid or proposal for those portions of the work in the same manner as all other trade contractors or subcontractors; and
(2) the governmental entity determines that the construction manager-at-risk's bid or proposal provides the best value for the governmental entity. Sec. 2267.256. REVIEW OF BIDS OR PROPOSALS. (a) The construction manager-at-risk shall review all trade contractor or subcontractor bids or proposals in a manner that does not disclose the contents of the bid or proposal during the selection process to a person not employed by the construction manager-at-risk, architect, engineer, or governmental entity. All bids or proposals shall be made available to the governmental entity on request and to the public after the later of the award of the contract or the seventh day after the date of final selection of bids or proposals.
(b) If the construction manager-at-risk reviews, evaluates, and recommends to the governmental entity a bid or proposal from a trade contractor or subcontractor but the governmental entity requires another bid or proposal to be accepted, the governmental entity shall compensate the construction manager-at-risk by a change in price, time, or guaranteed maximum cost for any additional cost and risk that the construction manager-at-risk incurs because of the governmental entity's requirement that another bid or proposal be accepted. Sec. 2267.257. DEFAULT; PERFORMANCE OF WORK. If a selected trade contractor or subcontractor defaults in the performance of its work or fails to execute a subcontract after being selected in accordance with this subchapter, the construction manager-at-risk may itself fulfill, without advertising, the contract requirements or select a replacement trade contractor or subcontractor to fulfill the contract requirements.

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