Understanding Construction Project Management Services

Construction Projects Management (CPM) is a complicated service that requires multiple skills and wide range of expertise. The right CPM Team can make the difference between a successful project and costly delays or overruns.

Services Included in Construction Project Management (CPM)

• Prepare all documentation for the Tender Process for contractors and suppliers (Briefing, Bill of quantities, meetings, screening, etc)

• Prepare the technical agreements with all necessary technical details for all of them to sign

• Prepare the Timetables of the project, milestones, etc

• Split the project in phases and prepare the detailed walkthrough

• Estimating costs and preparing budgets.

• Post Senior and Junior supervisors on site on a daily basis

• Have Senior Structural and Mechanical Engineers visit the site when needed.

• Resolve every technical issue on a daily basis

• Constantly communicate with the Architects of the project

• Coordinate all work, workers, technicians, machinery and suppliers

• Scheduling orders and deliveries to ensure the supply chain

• Quality control checks

• Ensuring compliance with safety regulations.

• Reporting progress to clients 24/7 with emails, meetings and online tools.

• Red Flagging and give a heads up about potentials deviations from timetable or budget

• Tracking expenses and managing cash flow.

• Approving invoices and payments to contractors and suppliers.

• Gathering warranties, manuals, and all other necessary documents for the project

• Forwarding site invoices to your accountant

• Communicating with the authorities

• Office support for all the above

Cost of Construction Project Management Services

CPM cost typically ranges between 7% and 15% of the total construction budget. The exact percentage depends on factors such as project complexity, size, location, and the level of service required.

Project Scales Where Project Management Commonly Applies

Project management is valuable across a wide range of construction scales, but it is especially critical in:

• Large-scale commercial projects: Office buildings, hotels, shopping centers, etc.

• Infrastructure projects: Roads, bridges, utilities, and public transportation systems.

• Complex residential developments: Multi-unit housing, and gated communities.

• Industrial facilities: Factories and plants with specialized requirements.

  
  

Smaller projects, such as single-family home builds or simple renovations, do not require full project management services

Comparing CPM Services with Fixed-Price Agreement

Clients often face a choice between the two. Each approach has advantages and drawbacks.

Fixed-Price Agreement with a Construction Company

PROS:

• Risk, Accountability & Contract: You transfer all risk to the construction company. They are responsible for anything that goes wrong, based on a multiple page detailed legal contract.

• Price model & Budget calculation: Allows for budget to be pre determined, since you pay a single fixed price. That gives you cost certainty. 

• Quality, Warranties & Reliability: A company is a reliable legal entity. Quality is guaranteed through contract. Plus you get warranty from a single entity

• Delays & Penalties: The construction company is fully responsible for delays and subject to penalty clauses. Best for tight deadlines

• Office Support & Accounting: The construction company handles all that.

• Client’s Involvement: Minimal to zero daily client’s involvement, and no emotional exhaustion

• Disputes: Easier dispute resolution based on a detailed legal contract

  
  

CONS:

• Cost: Average Company profit 20%-25%

• Cost breakdowns: You only know one fixed final cost for the entire project

  
  

Project Management Services

PROS:

• Cost: 7%-15% depending on scale and complexity

• Cost breakdowns: You know every single expense

  
  

CONS:

• Risk, Accountability & Contract: Owner takes all financial risks, delays, mistakes. The PM is not responsible for any mistake whatsoever. You have very weak contract, if any at all with technicians and subcontractors.

• Price model & Budget calculation: Zero cost certainty. Final cost not fixed and expenses can greatly escalate. Budget cannot be pre-determined, just estimated

• Quality, Warranties & Reliability: Individual technicians cannot provide guarantees regarding quality. The PM will check it but will have hard time imposing it. Technicians offer zero warranty

• Delays & Penalties: No penalties for delays can be claimed from technicians. You do not know who to blame when delays occur, and there is nobody to compensate you for that

• Office Support & Accounting: The owner needs to do all that

• Client’s Involvement: The owner has to micromanage everything

• Disputes: Easier dispute resolution based on a detailed legal contract

  
  
  
  

Choosing between these options depends on the client’s priorities. Project management suits clients who want active involvement and control, while fixed-price contracts appeal to those seeking cost certainty and simplicity.

Of course there is always the possibility to choose a hybrid model. Assign the heavy duty work to a construction company and do the finishings on a CPM basis.

Overall, by far the most modern and commonly way to build a construction project is by assigning it to a professional and experienced construction company. CPM is a good alternative only for small scale projects like renovations.