Construction management on an agency basis continues to be a major element in delivery of projects, as owners increasingly are under pressure to cut costs and outsource noncore functions. But this doesn’t mean agency CM is immune to construction downturns.

From a purely numeric standpoint, agency CM revenue took a hit in 2003 for the Top 100 CM-for-Fee firms, declining dramatically, from $7.8 billion in 2002 to $5.5 billion in 2003. That is a 29.5% drop. Some of this decline may be misleading, due to survey changes made by ENR in 2003. Last year was the first time the list specifically included a separate category for program management, and also specifically included program management as part of the CM-for-Fee list.

Thus, there may have been some misunderstanding about what was being requested. In the 2004 survey, ENR specified that only management fees, not pass-throughs, should be included in the program management fee portion of the survey. As such, the composition of the PM for-fee list, expanded now to the Top 40, has changed a bit (see p. 35).

The Construction Management Association of America, McLean, Va., is making outreach to owners a major priority. "Right now, 22% of our members are owner practitioners," says Bruce D’Agostino, CMAA executive director. "Owners don’t want CMs who are hired guns. They want someone who will sit down at the table as a partner."

In some cases, clients are wary of what agency CMs have to offer, and at what cost. "Some clients have resisted what they see as open-ended fees," says Terry Bush, president of Swinerton Management and Consulting, the CM-PM arm of Swinerton Inc. But he argues that a CM firm can be a life-saver to a troubled project. "We came in on the seismic retrofit of the Berkeley [Calif.] Civic Center," Bush says. Although the project was under way, "they brought us in simply because they wanted someone on their side of the table to help keep on schedule and budget," he adds.

But one of the major problems with marketing agency CM, or CM in general, is to try to quantify its value. So CMAA is now attempting to assess and benchmark the value of CM. "We are in the process of inviting universities and practitioners to study 10 topics relating to analyzing general contracting and CM," says Tom Bishop, senior vice president for construction services at URS and chairman of CMAA’s research and development committee. Among topics being offered are comparisons based on total project cost, change orders, management costs, owner risk exposure, speed of delivery and quality of work.

"We see a real need for the studies because there is a lot of confusion as to what CM provides," says Bishop. "This is our attempt to benchmark CM, to shed some light on the differences between CM and traditional general contracting."

The public sector, a big market in the past for agency CM, may be coming around again. "Today, public agencies have come full circle," says Joseph Seibold, vice president for construction management at Carter & Burgess and president-elect of CMAA. "Most started with design-bid-build, then jumped at design-build when they got the chance, and now may be coming around to CM." He says that some agencies may have gone with design-build, but treated it like design-bid-build, which defeated most of the advantages of design-build.