Construction Manager vs. General Contractor: Top 10 Differences

Updated On 30 December 2023.

The general contractor and the construction manager are key positions on-site and occupy an important place in the completion of the construction project. Though these two positions may look similar in scope and performance from the outside, they are different in many ways. You can find many Construction Manager vs General Contractor differences between a general contractor and a construction manager.

What is a General Contractor?

The general contractor or GC is a typical business entity that is in charge of supervising the day-to-day operations of a construction project.

They are hired through a traditional bidding process after the design phase is completed. Based on the architect’s designs, general contractors put together a bid package for the owner including their own overhead, profit margins, and fees. The owner awards the contract to the lowest bidder from the most reputable construction company.

General contractors work with their network of employees, laborers, and other specialty tradesmen or subcontractors while on the job site. They specialize in certain sectors like residential or commercial, others have specialization in energy, masonry work, foundation work, landscaping, etc.

General contractors usually possess high school diplomas or bachelor’s degrees with hands-on training experience.

Here are the main responsibilities of a general contractor:

• Managing the project’s budget
• Ensuring the building meets local codes and regulatory compliances
• Requesting bids from subcontractors, selecting quality ones (usually lower price bids)
• Overseeing subcontractors’ quality of work
• Coordinating with vendors and suppliers to ensure all building materials with accurate specifications are ordered and delivered on time
• Partnering with local regulatory authorities to complete site inspections on schedule
• Reporting to the project owner on work progress, additional requirements, or issues
• Coordinating different tasks with builders, laborers, and other types of workers

What is a Construction Manager?

A construction manager or CM performs as an independent advisor to the owner to supervise the pre-, post-, and construction phases of a project under the owner’s budget and schedule.

They are hired by the property owner based on their credentials, qualifications, and experience versus the lowest price. Since construction managers are involved right from the beginning, they consult on the design constructability and help develop the project’s budget.

They work under a fixed fee and receive no additional profit even if the work is finished under budget. Essentially, construction managers share a collaborative relationship with the owner.

Construction managers usually require a bachelor’s or master’s degree in construction management with several years of job training experience.

Here are the main responsibilities of construction managers:

• Pre-construction activities including design, permitting, hiring a general contractor
• Developing a budget and schedule based on the client’s specifications
• Working closely with architects and engineers during the design phase
• Coordinating and delegating tasks to team members
• Taking care of logistical requirements
• Maintaining regular communication with stakeholders and team members
• Conducting audits of health and safety protocols
• Acting as the owner’s representative throughout the project

Knowing the difference between general contracting and construction management will help one understand the nature of their duties and responsibilities in a commercial building project. As they are handling different roles in a project, they are responsible for different things and are answerable to the owner in a different manner.

The fact that many general contractors also act as construction managers and vice versa makes it difficult to label a particular person as one.

But closely observing the below-mentioned facts about construction manager vs general contractor will help us find the prominent differences between the two positions.

General Contractor	Construction Manager
Business Entity	Individual or a Group of People
Traditional Bidding Process	Qualifications Based Hiring
Enters the Project after Design Stage	Involved from the Beginning
Earns Profit from Cost Saving	Gets Paid a Fixed Fee
Manages Construction Process, Hires Subcontractors, and Deals with Vendors	Handles Overall Project Management
Legally & Contractually Responsible for the Project	Not Responsible for the Project
Physically Present On-Site	Not Necessarily Present On-Site
Business Relationship with the Owner	Collaborative Relationship with the Owner

1. Construction Manager Vs General Contractor: How They Help

General Contractors

• Come early in the project as in most cases; it is the GC who comes after the design phase of the project.
• When the owner has finalized their requirements for the project, then their next task would be to find a suitable General contractor so that they can entrust the entire project work to them.
• In such cases, they are responsible for the entire range of works starting from the design of the structure to the completion of the building. Thus they come into the project right at the start of the project and have their touch on every aspect of the project.
• Their voice is heard at every corner of the project as they are responsible for each part of the project.

Construction Managers

• A person who comes into the project after the project has already started if the preliminaries are taken care of by the owner.
• In a large-scale building project, it is common to see that the initial phases of the project, like designing, and estimation, are done by the project manager who then handles the task of managing the construction process.

2. Construction Manager Vs General Contractor: Client-Owner Relationship

General Contractors

• Work as a third party in the building projects after the owners and design/engineering team.
• Can negotiate a fixed-price, cost-plus, or time and materials contract model with the stakeholders.
• Since they are more beneficial when they save expenses and time, their relationship with the owners is competitive.
• Selection is done through a traditional competitive bidding process.

Construction Managers

• Work as an owner-partner and is often viewed as a representative of the project owner.
• For specific commercial projects, they may hire a general contractor to handle the day-to-day operations firsthand.
• They work under a cost-plus contract model, owning a percentage of the total project cost. It also promotes a collaborative relationship between them and the owners.
• Their selection is purely based on qualifications rather than bid prices.

3. Construction Manager Vs General Contractor: Place In The Overall Organization Of The Project

General Contractors

• Are a much larger entity than a construction manager and usually take the shape of a legal business entity.
• A general contractor is a role that needs to take care of the entire responsibilities in a construction process usually employing a large complement of employees with specialized knowledge, training, and experience in conducting various phases of large-scale construction.
• As a GC is expected to provide the right persons for each post, they usually have experienced supervisors, superintendents, and other key professionals who will be taking care of every part of the project.
• They work on the worksheet and conduct each of their parts to complete the entire project as planned.

Construction Managers

• It is just an individual or a group of people with the necessary knowledge, skill set, training, and experience to manage a building project by implementing the prepared design.
• They are simply building professionals who are more qualified to take care of project tasks.
• As they are predominantly a group of people who are entrusted with the job of managing and handling the building process, their group is often made of people who are trained to do the job alone.

4. Construction Manager Vs General Contractor: Team Structures

General Contractors

• Their team size is usually bigger and comprises a diverse group of people who are knowledgeable in different phases of the project, right from the early planning stage to the ultimate completion.
• Towards this, the range of people who form a general contractor team has the right mix of people who come into the project as designers, estimators, suppliers, general laborers, subcontractors, and skilled artisans like carpenters, electricians, plumbers, etc.

Construction Managers

• Their team is usually smaller in size and contains mainly the persons who are experts in administrative capacities.
• The construction management looks after the administration of the worksite and focuses more on getting on with the project as its administrator.
• The team of a CM involves people capable of acting as cost estimators, accountants, general administrative, and supporting staff whose responsibility is to help the project be completed as per the plan by effectively managing the people who are doing the building work.

5. Construction Manager Vs General Contractor: Roles and Responsibilities 

General Contractors

• The prime responsibility of a general contractor is to execute the construction plans as per the project designs. For this purpose, they hire qualified subcontractors fit for the job and coordinate their portion of the work.
• They work with vendors and suppliers to source building materials on time. They attend building inspections and ensure the construction is being built to code. 
• General contractors provide on-site supervision to keep the project on schedule and ensure safety. 

Construction Managers

• As they enter the project in its preconstruction phase, a construction manager gives oversight on activities like budgeting, design specifications, materials, and general contractor hiring. 
• Acting as the owner’s representative and point of contact, the construction manager handles the documentation process, bidding, and owner administrative duties. 
• They resolve job site issues, manage permits and inspections, control project costs, material procurement, and many other aspects. In short, construction managers supervise the overall project planning and implementation.

6. Construction Manager Vs General Contractor: Subcontractor Selection

General Contractors

• They have a pool of subcontractors to help him with various types of work on a subcontract basis. For this purpose, they will be maintaining a team of subcontractors needed for the successful completion of the project.
• A GC has the liberty and freedom to select their team of subcontractors to execute specific parts.
• Usually, these will be the people who will be doing the actual building work. These persons will usually be those who have worked under the GC on other projects.

Construction Managers

• It could be a company or person appointed afresh to conduct the building process, so they may not be familiar with the building team.
• As their work is managing the works of other persons engaged in the building process, they usually do not have the power to bring in or select their team of subcontractors and other people to work on the project.

7. Construction Manager Vs General Contractor: Qualifications and Specializations

General Contractors

• A commercial general contractor needs to obtain a state-regulated contractor license to work legally on construction projects. They must also provide proof of insurance or bonding. 
• Are specialists in working on certain types of aspects like foundations, masonry works, or framing in a building project.
• Likewise, many general contractors specialize in constructing residential buildings or commercial buildings or offer their services to certain parts of both industries.

Construction Managers

• Construction managers mostly hold an engineering or business management degree and may obtain specialty training post-bachelor’s. 
• They are not required to acquire licenses, however, professional certifications can score them attractive projects. 
• Are entrusted with just the management of the building process and can work in any type of construction project just taking care of the administrative part of the project.

8. Construction Manager Vs General Contractor: Hiring Process

General Contractors

• Gets into the project usually through competitive bidding or a reference from an old client, and hence they are third parties in the relationship with the owner.
• They are independent entity or person who takes on the project for completion on a contractual basis. Hence, no employer-employee relationship exists between the general contractor and the owner in the strict sense of the word.

Construction Managers

The owner directly appoints them to manage the project, usually as an employee. Hence the construction manager works under the owner.

9. Construction Manager Vs General Contractor: Cost Earnings From The Project

General Contractors

• Clients pay general contractors based on their lump sum bid. A contractor makes their profit by completing the project below budget and ahead of schedule, meaning, the difference between estimated cost and actual costs will become their profit. 
• Typically, general contractors charge between 10% and 25% of the total project costs or per-day fees between $300 and $500. 

Construction Managers

• Usually appointed based on a fixed salary or fees, and there is no question of making any profit out of the project execution. Their remuneration is fixed as a percentage of the total project cost and hence should be less costly.
• Fees of project managers range between 5% and 15% of the total project costs or an hourly rate of $63 in the United States. 

10. Construction Manager Vs General Contractor: Risk Management 

General Contractors

• General contracting manages a higher level of risk in comparison to construction management. 
• General contractors primarily tackle risks associated with on-site construction execution and subcontractor relationships. 
• If any unexpected issue happens, general contractors bear the accountability for resolving and minimizing negative impacts on the project. 

Construction Managers

• Construction project managers are responsible for mitigating different types of risks on building projects. For example, stakeholder conflicts, risks related to change orders, and construction safety. 
• By using predictive analysis through construction software, a project manager identifies problems beforehand. 
• They develop effective strategies on how to tackle unforeseen challenges including both internal and external risk management. 

Pros and Cons of Hiring a Construction Manager or a General Contractor 

Hiring a General Contractor: Pros and Cons 

Pros:

• General contractors hire quality subcontractors with relevant experience and vendors because of their established relationships with skilled trades. 
• Acts as your single point of contact when construction management is not on board.
• A design-build contractor overseeing both designing and construction unifies the work under a single contract. They will modify the design if you need minor improvements. 
• A general contractor holds workers’ compensation and general liability insurance. Meaning, that they are liable for any accidents or damages that happen during a commercial construction project, not the owner. 

Cons:

• Once you hire a general contractor with a fixed lump sum price, their incentive is to maximize profit margin, potentially misaligning their interests with yours. 
• When you hire a commercial contractor, they make the final decision on the building materials, methods, and workers, reducing your control over the project. 
• If you require specialized services or expertise, hiring a general contractor may get expensive if not provide accurate estimates. 
• Since any cost-savings are reverted to the general contractor, the quality of your project’s work may get compromised. 

Hiring a Construction Manager: Pros and Cons

Pros:

• A construction manager serves as a representative of the owner, hence, owners enjoy greater control over the project’s quality, costs, and schedules.
• The specialization of construction management is to navigate complex construction projects and identify the owner’s best interests.
• Their fees are transparent and not concealed within the bid.
• Hiring a construction manager ensures better coordination between the owner, architect/engineer, and the general contractor. 

Cons:

• The construction management does not assume risk for building defects, delays, budget overruns, or other problems. 
• Since you directly subcontract suppliers and subcontractors for the project, any issues with workmanship, timelines, or change orders fall on your shoulders. 
• Hiring a construction manager means legally you will have to work as your own general contractor. 
• Construction managers can be expensive to hire, as you pay a percentage of the total project costs.

Construction Manager Vs General Contractor: Who Is The Best Fit For Your Construction Project?

A general contractor could be perfect if:

• You favor the conventional bidding strategy.
• You do not have enough opportunity to work closely together with all the people handling the jobs.
• You prefer to have the builder take the whole responsibility for their subcontractors and their job.
• You would like to hire somebody who has a community of go-to builders who do a great job.

A construction manager could be perfect if:

• You do not wish to bother using a classic general contractor bidding procedure.
• You need a more collaborative venture that contains the owner’s involvement in the design phase.
• You prefer to pay a set fee.
• You want the CM to possess a comprehensive role in managing the project’s general financial arrangement and quality control.

Working with Both the Construction Manager and General Contractor

On certain construction projects, owners will hire either a general contractor or a construction management company, together with the latter overseeing the former. The functions are fluid and subject to change. Hence, the largest points of distinction nevertheless normally lie in reimbursement arrangements and degree of participation with project possession.

Whether hiring a GC or CM, owners should be cautious regarding safety and liability. There must be strict safety rules and guidelines for workers on their projects. Around 20% of worker fatalities came from the construction industry in 2018 and 2019.

Final Thoughts

Construction managers and general contractors play very different roles from each other in a project. A general contractor or GC in the traditional design-bid-build delivery system does not participate until the planning and design stage is complete. They get to know about the project’s specifications only through a request for proposal (RFP) sent by the owner.

A construction manager or CM is more suitable for complex building projects where they offer a specialized level of knowledge, expertise, and experience to the owners. They have the necessary resources and skills to supervise the cost, schedule, quality, and associated risks. Construction managers help owners achieve their vision by successfully finishing their projects.

FAQs

Can a construction manager become a general contractor?

Yes, absolutely. Through the Construction Manager / General Contractor (CM / GC) project delivery method, the construction manager negotiates a guaranteed maximum price (GMP) when the project’s design is 60-90% complete. If this price is acceptable to both parties, the owner issues a contract for construction services, and the project manager becomes a general contractor. This is also known as Construction Manager at Risk (CMaR).

What are the common work responsibilities of a general contractor and construction manager?

Both are responsible for project management, quality control, ensuring site safety, adhering to regulations, monitoring costs and schedules, and providing detailed reports to the owners.

What licenses and insurance do general contractors and construction managers require? 

General contractors require a state contractor’s license, general liability insurance, and workers’ compensation insurance. In some US states, construction managers need to carry licenses, although professional certifications are enough to demonstrate their expertise.

Relevant Resources:

How a Construction Project Manager Leads a Team Toward Success

Tips for Selecting the Right Commercial General Contractor In San Francisco? – Part 2