General Contractor vs Construction Manager

Most people assume that a general contractor and a construction manager fulfill the same purpose on a construction project. After all, they’re both seen as the job’s head contractor. While the perception of these positions may be similar, there are some fundamental differences you need to understand-making the right hire in a leadership role is crucial. That’s why we’ve put together a comprehensive list outlining what sets them apart, giving you the tools you need to make the best choice for your project. 

What is a General Contractor?

A licensed general contractor is in charge of the day-to-day on-site operations of your construction project. They're typically hired after the project owner has the final plans in place. The general contractor is then responsible for reviewing and managing the architect's designs, creating an appropriate bid package, and calculating the estimated project cost. The owner puts the project out to bid with several general contractors, often deciding to go with the lowest bid, making it a highly competitive environment.

When hiring a general contractor, it's important to remember that they're incentivized to keep the project under budget. Should the project come in under budget, the general contractor keeps the difference. On the other hand, if the project exceeds the estimated budget, the general contractor is responsible for acquiring additional funding from the project owner. This structure makes the bidding process all the more significant. 

Once the general contractor has been awarded the project, their everyday responsibilities include:

• Defining the pieces of work that will require subcontractors.
• Managing the bidding process with the various subcontractors, including completing the final bid package.
• Coordinating the work on the job site, overseeing the multiple timelines required by different subcontractors. 
• Working with the architect to adjust designs based on suppliers, combating supply issues or project delays.
• Ensuring the site is compliant with all regulatory authorities. 

What is a Construction Manager?

While the construction manager role is very similar to that of a general contractor, their involvement begins earlier. Typically, their input starts in the design phase, working alongside the architects and project owners to determine the job in its entirety. There’s a better sense of camaraderie and teamwork from the outset.

A construction manager tends to have a closer relationship with the project owner, working on a fixed fee rather than a lump sum. They wear many hats ranging from project manager to accountant and estimator. 

Five Differences You Should Know

1. The Fee Structure

A general contractor creates an overarching project bid that determines the budget required to execute the project, covering everything from overheads to delivery. If the general contractor is awarded the bid, they are paid this set amount to cover the build. Should the project come in under budget, they’re entitled to the remaining funds. 

The bidding process is an interesting one. The project owner encourages contractors to come in at a lower price from the project owner’s perspective. From a general contractor perspective, it’s in their interest to come in under budget, sometimes encouraging them to cut corners on the build affecting the result. It’s tricky to juggle, but it is possible to get it right. 

A construction manager has a fixed fee which the project owner agrees to from the outset. Actual costs are accumulated for the project competitively and visibly. Once the project is complete, the owner only pays for the actual costs incurred. In many respects, a construction manager improves your budget. 

2. The Owner Relationship

A general contractor and a construction manager interact with the project owner differently. A general contractor acts as a third party, following the ownership of the design team. Based on the fee structure outlined above, it’s in their interests to save time and money. While being a general contractor can be more profitable, it can spark a more competitive relationship with the project owner. It can become unpleasant at times. 

A construction manager works with the project owner as a partner. You could almost consider them an extension of the project owner, aligned on all fronts from the get-go. 

3. Their Credentials

A construction manager position requires a bachelor’s degree in construction management along with several years of on-the-job experience. They enter the field in a junior associate role, working their way up, allowing for plenty of networking from the word go. 

A general contractor may have a bachelor’s degree, but it’s not required. The bulk of their expertise comes from hands-on training. Many have spent years in the trade, working their way through the ranks to a general contractor position. The on-site experience is invaluable, often sparking meaningful relationships with subcontractors, allowing for better deals down the line. 

4. Involvement On-Site

A general contractor is more present on the actual job site. They’re physically involved in the execution of the construction, managing subcontractors and employees on the ground. 

A construction manager is not as involved on the job site. They work closely with the architects and project owners to manage budgets, schedules, and timelines, but they’re less hands-on in a physical sense. 

5. Organizational Structure

A construction manager tends to have a loosely defined organizational structure. Most construction management firms are individuals or small teams. They rarely employ additional staff given that their skillset services what’s required. 

General contractors fall under a more typical business structure. They often have executive leadership, middle management, and front-line employees. They tend to be much larger, tackling multiple projects simultaneously. 

Do You Need Both?

It’s tricky to make a conclusive statement, given that requirements change from project to project. While there is certainly value in having both a construction manager and a general contractor, it may not be necessary or possible in most instances. 

Decide What’s Right For You

Now that you have all the facts regarding a general contractor vs. a construction manager, you can decide what’s most appropriate for your project. If you prefer the traditional construction bid system and a more hands-off approach, perhaps a general contractor makes more sense. If you’d like someone to work with you on every aspect of the project from start to finish, then maybe a construction manager is a better fit. You’ve got the tools to make an informed decision that fits your objectives.