Obtaining the project

Bids

A bid is given to the owner by construction managers that are willing to complete their construction project. A bid tells the owner how much money they should expect to pay the construction management company in order for them to complete the project.^[2]

• Open bid: An open bid is used for public projects. Any and all contractors are allowed to submit their bid due to public advertising.
• Closed bid: A closed bid is used for private projects. A selection of contractors are sent an invitation for bid so only they can submit a bid for the specified project.^[2]

Selection methods

• Low-bid selection: This selection focuses on the price of a project. Multiple construction management companies submit a bid to the owner that is the lowest amount they are willing to do the job for. Then the owner usually chooses the company with the lowest bid to complete the job for them.^[2]
• Best-value selection: This selection focuses on both the price and qualifications of the contractors submitting bids. This means that the owner chooses the contractor with the best price and the best qualifications. The owner decides by using a request for proposal (RFP), which provides the owner with the contractor's exact form of scheduling and budgeting that the contractor expects to use for the project.^[2]
• Qualifications-based selection: This selection is used when the owner decides to choose the contractor only on the basis of their qualifications. The owner then uses a request for qualifications (RFQ), which provides the owner with the contractor's experience, management plans, project organization, and budget and schedule performance. The owner may also ask for safety records and individual credentials of their members.^[2]

Payment contracts

• Lump sum: This is the most common type of contract. The construction manager and the owner agree on the overall cost of the construction project and the owner is responsible for paying that amount whether the construction project exceeds or falls below the agreed price of payment.^[2]
• Cost plus fee: This contract provides payment for the contractor including the total cost of the project as well as a fixed fee or percentage of the total cost. This contract is beneficial to the contractor since any additional costs will be paid for, even though they were unexpected for the owner.^[2]
• Guaranteed maximum price: This contract is the same as the cost-plus-fee contract although there is a set price that the overall cost and fee do not go above.^[2]
• Unitprice: This contract is used when the cost cannot be determined ahead of time. The owner provides materials with a specific unit price to limit spending.[2]