What is Construction Manager at Risk (CMAR)?

Construction Manager at Risk (CMAR) is a form of project delivery method that involves the project owner hiring a construction manager (CM) to oversee the project. This method has become increasingly popular in the construction industry. It involves a professional construction manager who takes on the responsibility of managing all aspects of a building or infrastructure project, from beginning to end—design to construction close-out. Under this process, the CM is responsible for providing constructability input during the design phase and managing all aspects of construction, including budget and schedule.

In the CMAR project delivery method, the construction manager is responsible for both the design and construction phases of the project. In this role, the CMAR acts as a consultant to the owner, providing valuable expertise in project management, scheduling, cost estimating, and risk mitigation. The CMAR works closely with the owner and design team to ensure that the project is completed to the highest standards, while also staying within budget and on schedule.

The Construction Manager At Risk (CMAR) Approach

Owners who prefer to delegate construction decisions to a professional can opt for the construction manager at risk (CMAR) method. A qualified and knowledgeable construction manager can make this approach highly effective.

The construction manager makes decisions based on the owner’s best interest. Below is a quick overview of how the process works:

1. The owner of the construction project hires a construction manager.

Choosing the right Construction Manager (CM) prior to the bidding stage is a fundamental step in the Construction Manager At-Risk (CMAR) process. It can greatly impact the project’s budget and schedule. To mitigate the risk, it’s critical to seek out a CM with a relevant experience and industry network. Both the CM and the owner must diligently establish resolution frameworks in the contract, covering the management of changes, work scope increases, or issues that may arise during construction, including payment responsibilities.

2. The construction manager sets the Guaranteed Maximum Price (GMP) for the project.

Before entering the bid stage and presenting the Guaranteed Maximum Price (GMP), it’s crucial to establish the scope of work. Once a mutual understanding is reached, the Construction Manager (CM) provides the GMP. To address any potential construction-related issues, contingency line items are typically included in the GMP. At this stage, the CM is bound by contract to execute the project as planned and deliver the project within a guaranteed maximum price.

3. The construction manager acts as consultant in the design and planning.

One of the distinctive features of the CMAR (Construction Manager at Risk) process is that the Construction Manager (CM) serves as a consultant during the design and planning stage. This allows for continuous communication among the owner, architect, and lead contractor, who sometimes also functions as the CM. Throughout the design process, the owner receives cost estimates at predetermined intervals, ensuring that the project remains within the specified budget. If any cost estimates exceed the Guaranteed Maximum Price (GMP), the owner, architect, and CM collaborate to adjust the project scope, materials, or design as necessary to stay within the budget.

Unlike other project delivery methods, the CMAR process does not automatically select the lowest bid for the job. Instead, the CM carries out a prequalification process for subcontractors, prioritizing qualifications and experience. As a result, the chosen subcontractors are more likely to deliver higher quality work, encounter fewer lien claims, and result in lower long-term costs. This approach avoids the shortsightedness of solely focusing on the lowest bid.

4. The project enters in to construction phase.

Construction can commence once the Guaranteed Maximum Price (GMP) has been agreed upon, the design has been finalized, and subcontractors have been selected based on bids. The Construction Manager (CM) plays a crucial role as the intermediary between subcontractors, the owner, and the architect, serving as the main point of contact for the project and representing the owner in all aspects. Throughout the construction process, the CM prioritizes adherence to the GMP and collaborates with stakeholders involved in the CMAR process to address any budget concerns that may arise. Upon completion of the project, the CM may also oversee contract closure and ensure the proper documentation, such as warranties, permits, and inspections, is in order.

The Role and Responsibilities of a Construction Manager at Risk (CMAR)

The CM is responsible for providing a Guaranteed Maximum Price (GMP), or price limit the project cannot exceed, to the owner before the bidding stage, and must manage the project budget and schedule closely to avoid exceeding this price.

This type of contract provides owners with an increased level of control and accountability. This ensures that the owner will not be financially liable for any additional costs beyond what was agreed upon by reducing risks associated with cost overruns, scheduling delays, and other potential issues which can arise during the life cycle of any given project. The client is legally represented by the CM who takes project-specific decisions and is responsible for ensuring that all work is completed according to quality standards and within the specified timeline.

Questions to Ask When Hiring a Construction Manager at Risk

When hiring a CMAR for your construction project, there are several key questions that you should ask to ensure that you are working with a qualified and experienced firm. These include:

1. What is your experience with similar projects?

2. What is your approach to risk management?

3. How do you collaborate with the design team and construction team?

4. How do you ensure that the project stays within budget and on schedule?

5. What is your track record for completing projects on time and within budget?

6. Can you provide references from past clients?

By asking these questions, you can ensure that you are working with a CMAR firm that has the expertise and experience necessary to help you achieve your project goals.

CMAR vs. Design-Bid-Build Construction Management

The traditional project delivery approach is known as Design-Bid-Build. In this method, the owner contracts separately with a design team and a construction team. The design team develops the plans and scope of the project, and the owner will accept bids from general contractors for the project based on those plans. While this approach can be effective for straightforward projects, it can be more challenging for complex projects with multiple stakeholders.

By contrast, a CMAR approach involves a single contract between the owner and the construction manager. This allows for greater collaboration and communication between all parties involved in the project, and can help to ensure that the project is completed to the highest standards, while also staying within budget and on schedule. The CMAR method often costs owners more than traditional project delivery methods. This is because CM fees tend to be higher as they take increased liability and have a greater involvement in projects.

Advantages of CMAR in Construction Project

There are many advantages to using a CMAR for your construction project.

One of the key benefits of using a CMAR and perhaps the biggest advantage is that it allows for greater control over the project schedule and budget. Additionally, it allows for greater flexibility in terms of changes during construction since the CM can provide valuable input and feedback on potential solutions and cost savings before any decisions are made starting in the design phase, helping to ensure that the plans are construction-friendly and cost-effective.

Another key benefit of using the CMAR method is that it allows for greater collaboration between all parties involved in the project: the owner, the design team, and the construction team. By involving the CMAR early in the project planning phase, all parties can work together to identify potential issues and develop solutions that will help to avoid delays and cost overruns down the line. By working closely with the CMAR, the owner can establish realistic deadlines to the scope of work and ensure that the project stays on track throughout the construction process. This collaborative approach can help to ensure that the project is completed to the highest standards, while also staying within budget and on schedule.

Disadvantages of CMAR in Construction Project

The Construction Manager at Risk (CMAR) process has some notable disadvantages. Firstly, there is a significant cost risk for the construction manager. Developing the Guaranteed Maximum Price (GMP) before the final design poses challenges, as an incomplete or inaccurate scope of work can lead to potential losses in profit for the CM. Changes or additions to the scope of work may result in change orders and an increase in the GMP.

Secondly, the success of the project depends heavily on the construction manager, making them the single point of failure. Owners seek highly qualified CMs who can manage the project effectively. If the project fails or exceeds the GMP, the responsibility primarily falls on the CM. To mitigate risk, CMs should focus on projects that align with their expertise and experience.

Another concern is the potential compromise of quality control. Due to the CM’s strong motivation to stay within the GMP, there might be pressure on subcontractors to deliver more for less or to cut corners on materials and labor. Both the owner and the CM desire a high-quality project that complies with codes and meets all scope of work requirements, while avoiding any liens against the property.

Common Misconceptions About Construction Manager at Risk

Despite the many benefits of using a CMAR for your construction project, there are some common misconceptions about this approach to construction management. One of the biggest misconceptions is that it is more expensive than other project delivery methods. However, studies have shown that using a CMAR can actually save money in the long run, by minimizing the risk of delays and budget overruns.

Another misconception is that a CMAR approach involves sacrificing quality for speed and cost savings. However, by working closely with the owner and design team, the CMAR can ensure that the project is completed to the highest standards, while also staying within budget and on schedule.

Types of Projects That Benefit From CMAR

While the Construction Manager at Risk (CMAR) method offers numerous advantages, it is not suitable for every project. Certain project types benefit most from the CMAR approach. These include larger projects with extensive scopes of work accompanied by complex or evolving designs. The CMAR method proves valuable in handling the coordination challenges that may surpass the owner’s capacity or availability to manage effectively.

Furthermore, projects with strict schedule requirements that cannot be exceeded find the CMAR method beneficial. The involvement of a skilled CM ensures diligent project management to meet deadlines. Additionally, the CMAR method serves the needs of owners without significant experience in the construction industry who seek the expertise and professionalism of a CM to navigate the project successfully.

Types of Projects That are Not Suitable For CMAR

The Construction Manager at Risk (CMAR) method may not be the most suitable choice for every project. There are specific circumstances where alternative project delivery methods are often preferred. These include situations where the project is simple and straightforward, without significant complexities or intricacies that necessitate the involvement of a CMAR.

Difficulties in collaboration among the owner, architect, engineer, and CM, or a lack of adequate staffing within the owner’s organization to support collaborative efforts, can also make the CMAR method less favorable. Effective collaboration is crucial for the success of the project, and if the parties involved anticipate challenges in working together harmoniously, alternative methods might be considered.

In certain contracts, where the requirement is to select the lowest bidder, such as many government contract scenarios, the CMAR method might not align with the criteria. In these cases, where cost considerations take precedence over other factors, alternative project delivery methods that prioritize the lowest bid may be more appropriate.

Conclusion

In conclusion, a Construction Manager at Risk (CMAR) can be a game-changer for your construction project. By working closely with the owner and design team, the CMAR can help to ensure that the project is completed to the highest standards, while also staying within budget and on schedule. Additionally, the CMAR can provide valuable input into the design phase, helping to identify potential cost savings and ensure that the plans are construction-friendly. If you’re considering using a CMAR for your project, be sure to do your research and choose a qualified and experienced firm that can help you achieve your project goals.