General contractor vs. construction manager: what's the difference?

Owners often use 'GC' and 'construction manager' as if they name the same hire. They are related roles and the same firm can perform both, but the contract structure behind each one is meaningfully different — and the difference shows up exactly when something goes wrong.

The useful way to tell them apart is not by title. It is by asking two questions: who holds the contracts with the trades, and who absorbs it when a trade costs more than expected.

A general contractor contracts with you to deliver the work, typically for a fixed or guaranteed price. The trades are subcontracted to the GC, not to you. If a subcontractor's work costs more than the GC allowed for, that is the GC's problem, not a new invoice to you.

That is the whole proposition: one number, one contract, one point of accountability. You are buying certainty, and the price includes the cost of carrying that risk — which is why a fixed price is never the lowest theoretical number, and should not be.

The trade-off is visibility. You generally see the price of the work, not the price of each trade behind it. For most owners on most projects that is a reasonable exchange; for some, it is not.

A construction manager is usually paid a fee to manage a project where the trade contracts sit directly with you. They plan, procure, schedule, supervise and report — but they are managing your money rather than spending their own.

The upside is transparency and control. You see every trade bid, you can decide where to spend and where to save at the level of individual packages, and you are not paying anyone to carry risk on your behalf.

The downside is that the risk stays with you. If a trade package comes in over, that is your cost. If two trades disagree about whose scope a gap belongs to, you are the one holding both contracts.

A GC's price carries the cost of risk, so on paper it looks higher than a CM fee plus the sum of trade bids. Whether it ends up higher depends entirely on how the project runs. A job that goes smoothly usually costs less under a CM arrangement; a job that hits problems usually costs less under a fixed-price GC contract, because the problems were someone else's to absorb.

This is why the choice is a risk-appetite question rather than a value question. Neither model is a discount — they are different distributions of the same uncertainty.

Titles are used loosely enough in the market that you should ignore them and read the contract instead. Three clauses tell you everything: the price basis, who signs the trade agreements, and who carries the insurance and the liability for the site.

If the price is fixed and the trades are subcontracted to the firm, that is a general contractor regardless of what the letterhead says. If you are being asked to sign individual trade contracts and pay a management fee, that is construction management, however it was described in the meeting.

For most residential and mid-size commercial projects, a general contractor's fixed-price accountability is the simpler, lower-risk path for the owner. You have one number to plan around and one party to call, and you are not managing a portfolio of trade contracts alongside your actual job.

Construction management earns its place on larger or more complex programmes, where an owner has the internal capacity to hold trade contracts, wants package-level control over spending, and is genuinely equipped to absorb the risk that comes with it.

It is the model we build around, and we will say plainly when a project would be better served the other way — including when that means recommending an arrangement we are not the natural fit for.