General Contractor vs. Project Manager vs. Construction Management Company

By the DoItYourself.com Staff

Building your own home has become a popular choice with the rising costs of housing. It offers increased equity and ultimate control over a project. There are three ways an individual can build their home and they are by using a General Contractor, project manager, or construction management company. What are the differences between these options?

To answer this question, we must look at what each offers. General Contractors assume responsibility for the entire project. They handle the permitting process, completing work, and ordering materials. The owner simply secures the financing or pays the contractor at regular intervals. Stress levels are minimal since the owner is not involved in day-to-day operations. However, these services come at a price. It is common to see GC’s charging up to 20% of the total cost of the project. If you have the financial means to pay or finance this fee, a GC may be the right choice for you.

The second option involves hiring a project manager. This individual will have residential construction experience, and will be on site throughout the project. He or she will find subcontractors and schedule them, order materials, and oversee the entire process. They do not actually participate in the construction process, but rather manage a group of individuals. They charge less than a GC, but may not have ultimate control like a GC.

The last option is to hire a construction management company. These companies offer financing, construction support, and may have material purchasing options. They are usually national companies with large customer bases. In some instances, they may have local offices that offer on site supervision and assistance. Their fees range from several thousand dollars to tens of thousands. They are very similar to project managers in the scope of their work, but are usually not on site during construction.

So, which one is right for you? It usually comes down to which one you can afford. Hiring a qualified GC is the easiest option, but also the most expensive. With the rising cost of housing, it is not always possible to pay a GC 20% of the total project costs. Or, you may want ultimate control over the project – so working with a GC may cause tension. A project manager is a viable alternative, but they also charge fees for their services. Construction management companies offer a hybrid where they can assist you like a GC, but do not control the process. Their drawback is that they usually conduct business over the phone, so they may be too “remote” for your needs. To decide which one is right for you, analyze your needs. You may be a fantastic organizer and only need financing – in this case a construction management company may be best. If you have little time to manage a project, a GC may fit your needs best. If you are somewhere in between, a project manager could best suit your project. However, by analyzing your needs and comparing them to the strengths and weaknesses of each entity, you can come to a decision to fit your project.