What tendency does the percentage of construction method of compensating an agency CM have on time and cost control?

The tendency of the percentage of construction method of compensating an agency Construction Manager (CM) can discourage effective control over both time and cost. When a construction manager is compensated based on a percentage of construction costs, there can be a misalignment between their financial incentives and the project's need for effective cost management.

In this compensation model, as project costs increase, the CM's fee likewise increases, which may lead to less stringent oversight of expenditures and time management. The inherent incentive to maximize costs can result in a tendency to allow budgets to escalate and schedules to be extended without adequate control measures being implemented. Thus, the structure of this compensation method can create a scenario where the focus shifts away from efficient project delivery toward simply increasing costs, ultimately hindering effective cost and time control.

By understanding this dynamic, construction managers can recognize the importance of aligning compensation and performance incentives to promote better project outcomes. This knowledge is crucial for overcoming potential hurdles in project management and ensuring accountability for both budget and timelines.