What are the two fee methods that an Agency Construction Manager may offer?

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The correct answer identifies the two fee methods that an Agency Construction Manager may offer: Fixed Price or Guaranteed Maximum Price.

Understanding why these methods are valid requires a look at how they function within the context of construction management. A Fixed Price method involves setting a specific amount for the total project cost upfront, which provides clients with a clear budget. This method offers predictability and mitigates the risk of cost overruns, as the contractor is held to the agreed price, assuming no significant changes in scope occur.

The Guaranteed Maximum Price method, on the other hand, sets a ceiling on the total amount the owner will pay. This method provides flexibility, as it allows the project to be executed with varying costs while ensuring that the owner will not pay beyond the specified maximum limit. The advantage here is that Project Managers can exercise more control over costs while still being incentivized to find efficiencies.

Both methods are beneficial for managing risks and costs effectively in construction projects, which is central to the role of an Agency Construction Manager.

The other choices do introduce valid concepts commonly encountered in contracting, but they don’t specifically reflect the set of fee methods offered by an Agency Construction Manager. Options that feature Cost-Plus or Time and Materials may involve different types of financial

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