Construction Management Agreement
Definition - What does Construction Management Agreement mean?
A construction management agreement (CMA) is a contract that is drafted and signed between a contracted construction manager (CM) and a project owner.
CMAs establish and formalize the specific roles, responsibilities, and obligations for both parties throughout the duration of the contract and specifies the compensation and potential financial liabilities assumed by both parties.
Construction management agreements can vary significantly, depending on how much authority over hiring and purchasing the project owner wishes to delegate to the construction manager.
Save Your Spot at our Free Webinar - Qualifying Contractors: Risks & Best Practices
Safeopedia explains Construction Management Agreement
Construction management agreements gives oversight to a construction manager concerning the interplay between a project’s owner, its architect, and its primary contractor. This oversight acts as a form of risk control that enforces standards of quality, budget, timeliness, and safety.
CM agreements typically do not involve the CM performing the actual construction tasks themselves, but instead focus on formalizing their position and role as an advisor to the project.
Types of Agreements
There are various types of construction management agreements that can be signed between a project owner and a construction manager.
A “CM as Agent” agreement is one in which the CM acts solely as an advisor and manager, while the project owner signs all contracts with the various trade professionals who will be working on the site, as well as conducting other purchasing based on the CM’s advice.
At the other end of the scale, a “CM at Risk” agreement means that the CM directly contracts with trade professionals (subcontractors), and takes on the full risk and liabilities of carrying out the construction project.
In order to ensure that the assignment of responsibilities to the CM is arranged in a manner that is transparent and comprehensible to both the CM and their client, the details of a CMA are often laid-out and agreed-to under the auspices of a recognized and standardized third-party framework. For instance, the Canadian Construction Documents Committee provides standardized contracts for both CM as Agent and CM at Risk agreements (CCDC 5A and CCDC 5B respectively).