Construction Industry Terminology from CMAA Publications

Construction Management
A professional management practice consisting of an array of services applied to construction projects and programs through the planning, design, construction and post construction phases for the purpose of achieving project objectives including the management of quality, cost, time and scope.

Program Management
The practice of professional construction management applied to a capital improvement program of one or more projects from inception to completion.  Program Management provides additional benefits such as standardization, leveraged purchasing and economies of scale. 

Delivery System
The process selected to execute a construction project for the purpose of assigning responsibilities and risk to the project team.  Common delivery systems include:  design-bid-build, design build, multiple prime, and construction management at-risk.

Traditional Approach (Design-Bid-Build)
The Owner engages a design consultant, which prepares the design of the complete facility, including construction drawings, specifications and contract packages. 

Multiple Prime Contracting
The Owner holds separate contracts with Contractors of various disciplines, such as general construction, structural, mechanical, and electrical. In this system, the Owner, often through its CM, manages the overall schedule and budget during the entire Construction Phase.

In this system, individual contracts such as design, construction, and equipment, are directly executed and held by the Owner.  The Owner usually maintains the right and authority to approve and enforce the schedule, terminate, and to pay the Contractors directly.

At-Risk CM
A delivery system which entails a commitment by the CM for construction quality, time and cost.  The CM provides professional management assistance to the owner prior to construction and advice on constructibility, budget and schedule considerations. During construction the Construction Manager holds sub-contracts for construction, and will guarantee schedule and maximum cost of construction. 

Agency CM
A professional service that can be applied to all delivery systems where the CM acts as the owner’s principal agent in the management of a construction project or program, where the CM is responsible to the owner for managing the planning, design, construction and post construction phases, or portions thereof.  The CM represents the interests of the owner in its dealings with other construction professionals, and with other private and public entities. 

Design Build
For the Owner, the primary benefit is the simplicity of having one party responsible for both the development of the design and the execution of the construction for the project.  A key factor greatly influencing recent growth is the increased desire of owners to have a single point of responsibility for their projects to reduce their risk and the potential for disputes.

Open Book
Method of CM services that requires full disclosure of all committed cost and expenditures to the owner and the owner's representative.

The intent of the "open book" method is to clearly demonstrate to the owner, in a contractual relationship, all information on income and expenditures including all cost commitment, fees, records, books, estimates, access to all supporting documentation, i.e. materials and equipment; suppliers' and subcontractors' original invoices; receipts; bills of lading, etc...; upon request.

In the traditional CM agency role, all work scope categories, including negotiated or competitive bids, are fully transparent with the owner actively involved in cost evaluations and award of contracts, purchase orders, and subcontracts.  Any cost savings or reductions typically revert to the owner.

When a CM at-risk is contracted, and the CM develops a guaranteed maximum price (GMP), all pricing information from the trade subcontractors, suppliers and services is shared with the owner and the owner's representatives.  This stands as the key difference between general contracting and the conventional contracting methods where risk contingencies, profits, and other acquired margins are not disclosed.