Agreement between Owner and Construction Manager
for Services in Overseeing a Construction Project
Agreement made on the (date), between (Name of Owner), a corporation
organized and existing under the laws of the state of (name of state), with its principal
office located at (street address, city, state, zip code), referred to herein as Owner, and
(Name of Construction Manager), a corporation organized and existing under the laws
of the state of (name of state), with its principal office located at (street address, city,
state, zip code), referred to herein as the Construction Manager.
Whereas, Owner intends to construct a (briefly describe the Project), hereinafter
referred to as the Project, and to coordinate the development and improvement of
adjacent property for access and parking for the Project; and
Whereas, (Name of Contractor), a corporation organized and existing under the
laws of the state of (name of state), with its principal office located at (street address,
city, state, zip code), referred to herein as the Contractor, has entered into an
Agreement with the Owner to build the Project; and
Whereas, Owner desires to have the Project well constructed in an expeditious,
economic and efficient manner; and
Whereas, Owner deems it advisable to have an independent firm:
Oversee the administration of design and construction for the Project
Inspect the work of Contractor;
Coordinate the work of Contractor with the work of other contractors
engaged by Owner for the Project; and
Monitor the overall planning, budgets and schedules of the Project; and
Whereas, Construction Manager is an independent firm which employs
professionals who have the education, training and experience needed to perform the
duties set forth herein.
Now, therefore, for and in consideration of the mutual covenants and conditions
herein contained, the parties hereto agree as follows:
I. Employment of the Construction Manager.
A. Agreement to Serve. Owner hereby retains Construction Manager to
perform the duties set forth herein during the design and construction of the
Project. Construction Manager hereby agrees to perform all of its duties set forth
herein and those duties of the Owner's Representative as described in that
certain Construction Agreement dated (date) between Contractor and Owner,
hereinafter referred to as the Construction Agreement. A true and correct copy of
said Construction Agreement is attached hereto as Exhibit A and made a part
B. Services of Construction Manager. The services of Construction
Manager shall be performed under the general direction of Owner and shall
consist of consulting with, advising, making recommendations to Owner and of
coordinating all Owner aspects of the planning and construction of the Project for
Owner in order to expedite the completion of the Project in accordance with the
Construction Agreement. Such services shall include those services set forth in
Sections II and III below, and such other services as may be added to or deleted
from this Agreement and authorized by Owner and agreed to by Construction
II. Pre-Construction Services.
A. Consultation during Project Development. Construction Manager shall
review the final construction documents for the Project, including:
1. The site plans and specifications;
2. The foundation plans and specifications;
3. The structural plans and specifications;
4. The architectural plans and specifications;
5. The mechanical plans and specifications;
6. The electrical plans and specifications; and
7. The plumbing plans and specifications.
B. Construction Manager shall advise Owner on the selection of systems and
materials as contained in the preliminary studies, schematic design studies and
the design development documents. Construction Manager shall also review the
preliminary construction cost estimate submitted by Contractor for the Project
and if necessary revise such estimate at periodic intervals. Construction Manager
shall review any and all Contractor construction estimates, commenting thereon;
and make recommendations with respect to such factors as construction
feasibility, suggested economics, availability of materials and labor, time
requirements for installation and construction and cost. This review shall in no
way relieve the Contractor or the architect and engineers of record of their
responsibilities for the design, review, supervision and inspection of the Project.
C. Budget. Construction Manager shall revise and update the approved the
Budget of construction costs for the Project (hereinafter referred to as the
Budget, as modified by Change Order. The updated Budget shall be based on
the Construction Agreement and scope changes approved by Owner. The
Construction Manager shall update and refine this Budget for Owner's approval
as the development of the Project proceeds, and promptly advise Owner and
Contractor if it appears that the Project Budget will not be met and make
recommendations for corrective action.
D. Equipment and Project Support Facilities. Construction Manager shall
investigate and recommend a schedule for the design and construction of
support facilities and for purchase or lease and installation of Owner furnished
equipment as set forth in Exhibit B, and coordinate the schedule with the
preparation of contract documents and construction by Contractor. The
Construction Manager shall expedite and coordinate the design, construction and
delivery of the purchases or leases of Owner furnished equipment and the
E. Value Engineering. Construction Manager shall evaluate any Contractor
value engineering proposals submitted and make recommendations to Owner.
III. Construction Phase Services
A. Project Control. Construction Manager shall:
1. Coordinate and assist the activities and responsibilities of Owner
and make recommendations to permit the completion of the Project in
accordance with Owner's objectives of cost, time and quality;
2. Maintain a competent staff at the Project site as required with
authority to achieve these objectives.
3. Establish an on-site organization and lines of authority to effectively
carry out all phases of the Project on a coordinated basis as the Owner's
4. Provide for its site offices, including necessary utilities, telephone,
secretarial and message services as required by the Construction
B. Organizational Chart. Construction Manager shall prepare and submit to
the Owner an organizational chart, which shall include a time schedule,
Construction Manager's proposed job-site and home-office staff, identified by
name, and the job classification and salary of each member of said staff. The
organizational chart is subject to the written approval of Owner. Construction
Manager shall not be required to perform any services under this Agreement until
notification of approval of chart by Owner. No changes may be made to the
organizational chart without the express written consent of Owner once it has
C. Meetings. Construction Manager shall participate in all pre-construction
and construction and progress meetings with trade contractors and Contractor.
Construction Manager shall prepare minutes and furnish copies to all interested
parties and to Owner and meet with Owner, as requested by Owner, to discuss
the construction progress, problems and to review applications for payment.
D. Progress Records. Construction Manager shall keep accurate and
detailed written records of the progress of the Project during all stages of
planning and construction and shall submit weekly and monthly written progress
reports to Owner, including but not limited to, information concerning the work,
the Construction Manager's opinion of the percentage of completion and the
number and amount of all change orders pending or approved to date.
Construction Manager shall:
1. Identify potential variances between scheduled and probable
2. Review Contractor's Schedule for work not started or incomplete;
3. Recommend to Owner adjustments in the schedule to meet the
probable completion date.
4. Provide summary reports of each for monitoring;
5. Document all changes in the schedule; and
6. Provide the reports to Owner.
E. Contract Defaults. Construction Manager shall:
1. Recommend courses of action to Owner when requirements of the
Construction Agreement are not being fulfilled.
2. Determine the need for and recommend to Owner the institution of
partial or complete default proceedings against Contractor and/or the
termination of any separate direct contracts, the assessment of liquidated
damages, and assist the Owner in selecting alternate contractors to
perform defaulted work;
3. Assist in evaluating back charges or other damages or penalties to
Nothing in this Paragraph E shall in any way limit the Owner from taking
any action or refusing to take any action with regard to the Project,
notwithstanding any recommendations by the Construction Manager.
F. Cost Control. Construction Manager shall:
1. Revise and refine the approved budget of construction cost for the
2. Incorporate approved changes as they occur;
3. Develop cash flow reports and forecasts as needed;
4. Derive cost estimates on changes of scope to verify Contractor
estimates for negotiation assistance, after prior approval of scope change
5. Provide regular monitoring of the approved Budget of Project
construction cost, showing actual costs for activities in process and
estimates for uncompleted tasks, identify variances between actual and
budgeted or estimated costs;
6. Promptly advise Owner whenever projected costs exceed budgets
or estimates, including without limitation, all work performed on a time and
material basis, unit cost or similar basis; (iii) keep current computerized
records and computations and summaries; and (iv) provide copies of a
printout of such information at least once a month to the Owner.
G. Change Orders. Construction Manager shall
1. Review all requests for Change Orders;
2. Implement the procedure for processing of change orders by
obtaining a proposal from Contractor and reviewing and evaluating such
3. Assist in negotiating cost of Change Orders;
4. Make recommendations to Owner and be prepared to substantiate
all evaluations to Owner; and (v) prepare Change Orders for Owner's
signature with the assistance of Contractor.
5. Recommend necessary or desirable changes to Owner;
6. Review requests for changes and applications for extension of time
7. Submit recommendations to Owner; and
8. Negotiate change orders.
H. Payment Procedures. Construction Manager shall develop and
implement a procedure for the review and processing of applications by
Contractor for the Project for progress and final payments and make
recommendations concerning all certifications to Owner for payment.
I. Inspection. The Construction Manager shall:
1. Inspect the work of Contractor as set forth in the Construction
Agreement to determine, for the benefit of Owner, that all work on the
Project is being performed in accordance with the requirements of the
contract documents, drawings and specifications;
2. Use its best efforts to guard the Owner against any and all defects
and deficiencies in the Project;
3. Require Contractor or other trade contractors performing work on
the Project to stop work or any portion thereof, and require special
inspection or testing of any work believed to be not in accordance with the
provisions of the contract documents whether or not such work be then
fabricated, installed or completed and reject work which does not conform
to the requirements of the contract documents, drawings and
specifications for such work. Such inspections by the Construction
Manager, as the Owner's representative, shall in no way relieve the
Contractor of its obligation to comply with the contract documents or the
architects or engineers of record of their obligations to make independent
J. Contract Performance. Construction Manager shall review the work of
Contractor on the Project until final completion and acceptance of the Project by
Owner, assure the Owner that the materials furnished and work performed on the
Project are in accordance with the plans and specifications and other contract
documents, and that the work on the Project is progressing on schedule. In the
event the interpretation of the meaning and intent of the plans and specifications
becomes necessary during construction, Construction Manager shall, on behalf
of Owner, consult with Contractor, ascertain Contractor's interpretation, and
transmit such information to Owner and make appropriate recommendations to
Owner concerning said interpretation.
K. Shop Drawings, etc. Construction Manager shall review shop drawings,
catalogs and samples for compliance with the contract documents and make
recommendations to the Owner. Construction Manager shall also coordinate
procedures to be followed for expediting the processing of shop drawings,
catalogs and samples for the Owner. Such review shall in no way relieve the
Contractor of its obligations to comply with the contract documents or the
architects or engineers of record of their obligation to make an independent
review of all submittals.
L. Start-up. Construction Manager shall, with Owner's maintenance
personnel, assist in the checkout of utilities, operational systems and equipment
for readiness and assist in their initial start-up and testing.
M. Owner-Purchased Items. Construction Manager shall accept delivery
and arrange at the expense of the appropriate party, storage, protection and
security for all Owner-purchased materials, systems and equipment until such
items are turned over to the Contractor or incorporated in the Project.
N. Owner's Consultants. Construction Manager shall, if required, assist
Owner in selecting and retaining professional services of special consultants and
testing laboratories and coordinate these services.
O. Tests. Construction Manager shall review all tests of cement, concrete,
structural or reinforcing steel or of any other material or equipment required to be
tested under the terms of the contract documents for conformity with the terms
and conditions of the contract documents.
P. Reports and Records.
1. Construction Manager shall:
(i) Record the progress of the Project,
(ii) Submit written progress reports to Owner, including
information on the Contractor and work, the percentage of
completion and the number and amounts of change orders,
(iii) Keep a daily log available to Owner in which shall be
described in detail all work accomplished on the preceding working
day, the number of persons employed at the site and the number of
hours worked, material shortages, labor difficulties, weather
conditions, list of visiting officials and jurisdictions, daily activities,
decisions, observations in general and specific observations as
(iv) Review the "as built" drawings as prepared by the Contractor
to determine that they are kept current and produced to fulfill the
contract requirements and maintain a complete set of such
(v) Maintain at the Project site, on a current basis, to be
available for review by Owner at all times: records of all contracts,
orderly files for correspondence, reports of job conferences,
reproductions of original contract documents including all addenda,
change orders, supplemental drawings, shop drawings, “as built”
drawings, samples, purchases, materials, equipment, maintenance
and operating manuals and instructions, and any other related
documents and revisions which arise out of the Project.
(vi) Obtain data to be furnished and maintain a file of operating
manuals and routinely review the contractor's current set of record
drawings and specifications.
(vii) At the completion of the Project, deliver all such records to
(vii) Prepare when requested by Owner all replies to
correspondence from the Contractor, including letters and
complaints, for signature and approval by Owner.
Q. Substantial Completion. Construction Manager shall inspect the Project
with Owner between thirty to forty-five days prior to the time Owner is to take
over, use, occupy or operate any part or all of the Project and, in addition, fifteen
to twenty days prior to the time Contractor is expected to complete its work,
furnish a detailed report to Owner of discrepancies and deficiencies in the work
performed or any materials provided by any material supplier, determine
substantial completion or beneficial occupancy as appropriate, prepare all
necessary punch lists and expedite execution of same, and monitor the
correction and completion of said work.
R. Final Completion. Construction Manager shall inspect the Project with
Owner upon the completion of construction and thereafter Construction Manager
shall provide a final detailed written report to Owner setting forth the Construction
Manager's opinion as to whether or not the Project is finally complete. Owner
need not issue the Certificate of Final Acceptance until it has received
certification of final completion from Construction Manager.
S. Claims and Litigation. In the event any claim or claims are asserted
against Owner, or any action brought in any way relating to the construction of
the Project, Construction Manager shall diligently render to Owner any and all
assistance which Owner may require. In the event such services are requested
by the Owner and rendered by the Construction Manager, the Construction
Manager shall receive an additional fee for such services.
T. Duration of Contract. The services of the Construction Manager shall
commence as of the date hereof and Construction Manager shall continue its
services hereunder until the Final Acceptance. Any of Construction Manager's
continuing obligations under this Agreement shall survive Final Acceptance and
final payment by Owner, and termination of this Agreement with or without cause.
U. Time of the Essence. In performing the services hereunder, Construction
Manager shall place emphasis on considerations which will aid in expediting the
construction of the Project. Construction Manager agrees to use its best efforts to
effect completion of the Project on or before the Project Completion Date and, to
this end, but without limitation, it shall give constant attention to the adequacy of
Contractor's planning, personnel, equipment and the availability of materials and
supplies. Construction Manager acknowledges that time will be of the essence in
completion of the Project and that it will be its responsibility to attempt to prevent
delays. Construction Manager will keep informed as to situations which may
result in delays and take immediate steps to avoid the occurrence of such delays.
If such a situation is not resolved immediately, Construction Manager shall bring
it to the immediate attention of Owner and make appropriate recommendations to
the Owner to resolve or mitigate any potential loss or damage that could arise
from such situation.
IV. Construction Manager Personnel
A. Communications in Writing.
1. All recommendations and communications by Construction
Manager to Owner that will affect the cost or completion date of the
Project shall be made or confirmed by the Construction Manager in
writing. Owner may also require other recommendations and
communications by Construction Manager to be made or confirmed by it in
2. All recommendations relating to proposed changes in the work,
work schedules, requests for time extensions and instructions to
Contractor, shall be made directly to the Construction Manager and Owner
by the Contractor, unless otherwise directed by Owner.
B. Construction Manager/Independent Contractor. The relationship of
Construction Manager to Owner shall be that of independent contractor, and
Construction Manager shall have no authority to bind Owner in any way with third
parties, except as specifically set forth in writing where Owner may permit
Construction Manager to execute agreements as an agent of Owner.
C. No Third Party Beneficiaries. Nothing contained herein shall be deemed
to create a contractual relationship between or among Construction Manager,
Contractor, subcontractors or material suppliers for the Project, nor shall anything