Practice Tip – PT.23.2

Version 1.1

May 21, 2012

CCDC Construction Management Contracts

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Summary

replaces the role a general contractor has in traditional design-bid-build delivery. The owner still engages an

architect to design and prepare construction documents, but also engages a CM at an early stage as a

consultant to provide advice, oversee and manage construction: planning, costs, scheduling, methods and

materials. This CM could be a contractor, an architect or engineer, a consulting person or other entity as long

as they have the necessary construction expertise and trust of the owner. The CM may also be brought on

board after construction documents have been prepared. The CM will have a full time person on site acting as

a site superintendent the same way that a general contractor does in traditional project delivery.

The philosophy behind the benefits of CM is similar to that currently ascribed to Integrated Project Delivery;

bringing a more comprehensive team together for collaboration during design and the ability to start

construction earlier than with traditional design-bid-build. In construction management, instead of bidding by

management only – often referred to as CM as Agent. Alternatively the CM signs all the contracts with trades,

and takes on the risk of the construction performance and the cost and schedule for the same, while still

providing construction management advice in the early stages – often referred to as CM at Risk.

The cost of the construction can be set up in several ways: cost plus (minimal risk to the CM), a guaranteed

maximum price (GMP), a fixed price (maximum risk to CM) or various arrangements of GMP with a sharing of

cost savings between the owner and CM.

History of Construction Management

When construction management is described as “starting construction before the plans and specs are done”,

it shows that the process has been around since the time of the pyramids. Owners acted as general

contractor by utilizing their own construction expertise or by hiring outside entities. The multiple trade works

same time that fast track, project management and computers began to be common in the industry. The

impetus for fast track and construction management came in part from the consistent desire of owners to

reduce costs and time for project delivery. Construction management allowed owners to bring in specialized

construction expertise prior to bidding and more importantly allowed construction to start earlier than the

traditional design-bid-build approach.

The Canadian Construction Association (CCA) introduced a “Guide to Construction Management” in 1979

with sample contract terms and nine years later published CCA 5 – 1988 “Construction Management Contract

Form between Owner and Construction Manager”. The CCA 17 – 1996 “Stipulated Price Contract for Trade

Contractors on Construction Management Projects” was used for trade contracts.

The term CM as Agent began to be used describing a new role for contractors in providing consulting services

contracts. In 2008 the CCDC was tasked with developing appropriate changes.

Background

In November, 2010 the CCDC published a new suite of three standard contract forms for Construction

Management:

CCDC 5A Construction Management Contract – for Services” (replaces the old CCA 5-1988, also referred

to as CM as Agent)

CCDC 17 Stipulated Price Contract between Owner and Trade Contractor for Construction Management

Projects” (replaces the old CCA 17-1996)

CCDC 5B Construction Management Contract – for Services and Construction” (is brand new, also referred

to as CM at Risk)

CCDC 5B is used when the CM provides pre-construction advisory services to the owner and then

undertakes the construction. The CM engages trade contractors as subcontractors and is responsible for their

performance. The CM acts as consultant to the owner in the design phases, but as the equivalent of a general

contractor during the construction phase. When a CM is bound to a maximum price, the most fundamental

character of the relationship is changed. In addition to acting in the owner's interest, CMs must also protect

their own financial interests and control construction costs to not exceed the maximum price.

How Construction Management can Affect Architect’s Services

To have the CM as the key player in the project may be of concern to some architects but it is a valid

approach for an alternative form of delivery. Construction management has its place but it is not ideal for all

projects.

concerned that the splitting of the role of making interpretations and findings between the consultant and the

CM in CCDC 5A and 17 can increase the likelihood of conflicts and believes that the role of making findings

should be left only with the consultant as it was in the previous CCA 5–1988 and the CCA 17-1996. The OAA

has developed amendments and supplementary conditions to achieve this change for the new 5A and 17

contracts. Refer to PT.23.3 – “CCDC 5A, 2010 – Construction management Contract – For Services” and

 General

- It is critical to be aware that with a CM as an owner’s consultant, the team is more complex, as

advisory roles can be blurred, advice from the architect can be in conflict with that of the CM.

Architects often will have less direct contact with the owner. Some owners engage a CM because

they have confidence in the practicality of a contractor. In the construction phase the CM will take the

lead.

- Where the CM and owner have an agreement that includes shared costs savings, there can be

extensive requests to consider or recommend alternatives by the CM or individual trades.

- Often the owner and CM will not want to share a copy of their agreement with the architect, which

makes it unworkable to coordinate services or to know the level of administration expected of the

 Construction Documents

- The preparation of drawings is often requested to be expedited reducing available time for

coordination and checking for completeness and errors.

- CMs often want drawing packages for certain trades versus the traditional single comprehensive set

of drawings. This requires more time to coordinate and modify early packages as the remaining

packages get completed plus additional printing and preparation costs.

- CMs may wish to change Division 1 of the specifications.

 Bidding

- There is some difficulty in defining the scope of trade packages. The CM should clearly define the

scope of works for each trade.

the usual role of the architect to make interpretations and findings in matters of dispute split between

the architect and the CM.

about financial progress; on the other hand they may be asked to certify payments and do Certificates

of Substantial Performance for many separate trades.

It can be more complex to maintain the traditional professional role of the architect in being fair to both sides

(owner and contractor) because there are more ‘sides’. On owner/developer projects, the roles and

responsibilities of the owner/developer and CM can before very blurred.

The Architect as CM

Architects can be CMs and enter into a CCDC 5A agreement with an owner. Some architects doing small

projects such as restaurant or house renovations may be asked by the client to arrange the trade works but

don’t feel it necessary to have a general contractor. It may seem like a construction management approach

Practice Tip PT.26 – “Provision of Architectural Services and Construction Services – Conflict of Interest

Guideline”.

1. Become familiar with the construction management form of project delivery including standard contracts

available and sources for additional information such as Royal Architectural Institute of Canada (RAIC)

Canadian Handbook of Practice (CHOP), OAA PTs, and OAA recommended supplementary conditions.

2. To clients asking about construction management, provide information, sources for additional information,

possible pros and cons of options remembering that the determination of the project delivery method is an

owner’s decision. If you advise and make strong recommendations – It may be seen as your decision and

your risk.