What are the legal distinctions between construction management and project management?

Full question:

What are the legal differences between the disciplines of construction management and project management as they relate to construction projects? Do to the courts recognize them as different disciplines?The reason for the questions is this. The state of Alaska Administrative Code 4 AAC 31.055(c), Selection of designers and construction managers, states, '(a) If a school district determines that it is necessary to engage the services of a private consultant to design or provide construction management for an educational facility with money provided under AS 14.11.011 - AS 14.11.020 , or for a project approved for reimbursement of costs under AS 14.11.100 , and the estimated cost of the contract is more than $50,000, the selection of the consultant shall be accomplished by soliciting written proposals by advertising in a newspaper of general circulation at least 21 days before the proposals are due. The contract shall be awarded to the most qualified offer, after evaluating the proposals submitted. (b) Nothing in this section precludes a school district from retaining the services of a consultant on an as-needed basis under a multi-year contract, if the term of the contract is not more than five years. (c) The school district shall provide a procedure for administrative review of complaints by aggrieved offers which allows them to appeal, within 10 days after the notice of intent to award, requesting a hearing with notice to interested parties, for a re-determination and final award in accordance with law. 'Would this preclude the department of education from hiring a project manager without solicitation as required by this section?

• Category: Contractors
• Date: 04/07/2025
• State: Alaska

Answer:

Project Management and Construction Management share similarities but have key differences. Both involve three parties: the Owner, the Consultant, and the Contractor. The Consultant represents the Owner in both methods, facilitating communication with the Contractor, who performs the construction work. However, their contractual relationships differ significantly.

In Project Management, the Owner has direct contracts with both the Consultant and the Contractor. This allows the Owner to maintain control over project decisions and potentially benefit from competitive bidding. The Consultant advises but does not have a direct contract with the Contractor.

In contrast, Construction Management involves a single contract between the Owner and the Construction Manager (the Consultant). The Contractor becomes a subcontractor to the Construction Manager, meaning the Owner has less direct involvement in day-to-day decisions and may experience a faster project completion. The Owner's accounts payable department only deals with one entity.

Another distinction lies in contractor selection. In Project Management, the Owner selects the Contractor, using competitive bidding or negotiation as they see fit. The Consultant can advise but does not decide. In Construction Management, the Consultant plays a more significant role in contractor selection, often determining the method of selection alongside the Owner after establishing the project budget.

Liability also differs. In Project Management, the Consultant is liable only for design-related issues, while the Contractor is responsible for construction work. If the Owner makes decisions without the Consultant's approval, they assume liability. Conversely, in Construction Management, the Consultant is accountable for both design and construction issues, simplifying the liability structure for the Owner.

Regarding Alaska's Administrative Code 4 AAC 31.055, it specifically mentions construction managers but does not reference project managers. Therefore, it suggests that hiring a project manager without following the solicitation process outlined may not be permissible.