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What is Construction Management At Risk?

What is Construction Management At Risk? commercial construction blogs

Construction manager at risk (CMAR) is a project delivery method, in which the construction manager (CM) oversees and delivers the project with a guaranteed maximum price (GMP). CMAR is a derivative approach of the original design-bid-build process, also known as traditional building. Unlike, the traditional method the CM acts as the owner’s representative and advocate during the entire construction process. This type of project delivery method is ideal for project owners that are seeking an expert’s assistance in managing their project. Ultimately, this project enables the owners of the project the option of not being included in the project and puts sole responsibility on the construction manager.

CMAR project method begins when the owner of the project gives the initial designs of the project to the construction manager. The CM will work with and direct project designers to create plans. Once the design phase is halfway done, the CM will share the Guaranteed Maximum price with the owner. If the GMP is accepted by the owner, then it will represent as the price threshold that a project cannot exceed. The GMP highlights the importance of the CMAR to manage and control construction cost of the project.

If the CM fails to keep the price under the guaranteed maximum, the CM takes on the financial risk and obligation. If the CM keeps the price under the Guaranteed Maximum price, then the CM is rewarded by a cost sharing agreement with the owner. However, there are cost exceptions to the GMP, such as change orders by the owner. Change orders are alterations made to the project specifications. For example, if you originally agreed to add one stairway to commercial property in your build-up project, but then decided to add two.

After the design phase, the CM will take bids from contractors for the project. However, the CM must select bids appropriately by meeting the needs of the owner without crossing the price threshold. When the construction starts, the CM will plan out the construction process. The CM is responsible for overseeing the progress of the project such as ensuring that quality and safety standards are met.

What are the Advantages of Construction Manager At Risk?

  • The construction manager acts in the best interest of the owner.
  • Owner has peace at mind during the construction process.
  • The risk is limited to the owner.
  • Construction managers assist in cost estimating and engineering of the project.
  • High valued project delivery, the construction manager is motivated to reduce cost and run the project efficiently as possible to protect his/her bottom line.

What are the Disadvantages of Construction Manager At Risk?

  • Often the scope of work can be quite vague under the GMP
  • Inaccurate or incomplete designs can result in numerous change orders that will be costly
  • Owner may not feel they are getting a fair price due to price competition being limited.
  • Hard to implement on smaller projects.

Summary of Construction Manager At Risk

CMAR is a project delivery method that puts the risk and responsibility of the project’s success on the construction manager. Many owners find this favorably due to low participation needed on their part and the CM acts in their best interest. In addition, the guaranteed maximum price of the project sets the limit to the owner’s financial obligations, outside of change orders. The construction managers plans and oversees the project from start to finish, and is motivating in controlling cost and improving efficiency.

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