Agency construction management vs. construction at-risk construction management, Gallagher Construction Management Services, inflation and more

I have never blamed Gallagher for inflation-driven cost overruns. And, as I’ve said elsewhere on this blog, I expect most construction managers who do projects as big as the Lancaster School District’s 2004 bond issue to be agency management rather than at-risk management.

The nickel definition of the difference is that an agency manager doesn’t guarantee locked-in prices in case of inflationary surges, while an at-risk manager is theoretically on the hook for at least some of this, though contracts can vary from case to case. The flip side is that, the bigger the project, the more risk an at-risk manager carries. So, he or she has to have a higher base price; that’s the only way you can do that without losing your shirt. And, given the recent volatility in oil, steel and concrete prices, I doubt most at-risk managers can in any way afford to do major projects.

Indeed, speaking of this, with a brother and nephew in the Oil Patch, I have in the past defended Gallagher in specific ways.

On the other hand, Superintendent Larry Lewis, while defending Gallagher, hasn’t explained how the two different types of managers work. I’ll admit that I haven’t either, on the assumption that nobody would expect guaranteed prices on projects that big. (And, that’s true of private-sector work, too.)

But, I’m not the person who persuaded the school board that Gallagher was the company to use. I don’t know if board members have questions about this, or if they know about the two different ways of doing business.

I totally doubt this will satisfy last-ditch opponents who simply look for reasons to be oppositional. But, many in the “silent majority” might want more information.