Which method of compensation is commonly associated with agency CM?

In the context of agency construction management (CM), the cost reimbursement method is a common approach for compensation. This method allows the construction manager to recover direct project costs along with an agreed-upon fee. This can be particularly beneficial in projects where the scope and design are not fully defined at the outset, allowing for flexibility as the project progresses.

Cost reimbursement helps to foster a collaborative environment since it aligns the interests of the owner and the construction manager, emphasizing transparency. The owner is responsible for actual costs incurred, which can include labor, materials, and overhead, while the construction manager is incentivized to control costs effectively and ensure that the project is completed within budgetary limits.

This method stands out because it is structured in such a way that it can accommodate changes in project scope or unexpected challenges without penalizing the construction manager financially, which can lead to better project outcomes and improved relationships between parties involved.