Nov 10, 2021
Project delivery methods establish contracts for a project and how team members communicate. They also determine essential factors like risk, cost, quality, and collaboration methods.
Traditional project delivery methods include design-build and design-bid-build . However, several more delivery methods, such as Construction Management-At-Risk, have become more popular within the construction industry in recent years.
In this article
What is the Construction Management-At-Risk project delivery method?
The Construction Management-At-Risk (CMAR) project delivery method means that the project owner hires a construction manager early on in the process—typically in the design phase—to serve as a representative and consultant during the project. The Construction Manager also manages the project throughout each phase, ensuring it stays on budget and on schedule.
An individual construction manager or a construction management firm can hold this position, depending on the project’s size. Sometimes larger projects require an entire construction management team overseeing the process, whereas smaller projects may require one construction manager. The owner’s preference is key, as they might want the assurance of a team’s expertise or would rather collaborate with one person.
The CMAR method establishes a Guaranteed Maximum Price (GMP), or price limit the project cannot exceed. The construction manager is contractually bound to adhere to the GMP and is financially liable if the project goes over budget (hence the term “at risk”).
How is CMAR used throughout the phases of construction?
Similar to the design bid build project delivery method, CMAR projects often begin when the owner hires a design firm. Then, shortly after the design phase begins —typically when the design firm is determining the project’s scope during the programming phase —the owner brings in a construction manager.
- The project owner selects the Construction Manager (CM) based on qualifications and experience. A productive relationship between the owner and construction manager is instrumental to the CMAR method, so the owner needs to find a construction manager they can trust. Involving the CM in the early stages of the design phase helps build a collaborative relationship from the beginning. It also helps the CM determine an accurate and realistic guaranteed maximum price later on.
- The CM collaborates with the design team and owner during the design phase. As the design is developed, the CM determines the GMP. They also provide services like value engineering, an analysis that aims to minimize project costs and select efficient materials and equipment.
- Once the design is nearly completed, the CM determines the GMP . At this point, the CM can get a good sense of how much the project will cost based on their estimates from the design. The owner and CM negotiate the GMP to find an agreed-upon sum. This is an essential stage of the CMAR project delivery method, as the owner and CM sign a contract that binds the CM to the Guaranteed Maximum Price. The CM is now financially liable for any costs that go over budget.
- The CM hires subcontractors and oversees construction. During this phase, the CM serves as a general contractor and coordinates all construction. Because the CM is working off the GMP, they oversee all elements of construction in order to stay on schedule and budget. They continue to serve as the owner’s representative, keeping them informed of the project’s progress until it is finished.
Advantages of CMAR
CMAR’s collaborative nature makes it an efficient, cost-effective solution for owners.
- Owners aren’t liable for increased budget costs . CMAR is a collaborative, cost-efficient project delivery method, especially when a CM provides value engineering services.
- Saves time between project phases. With CM’s involvement in the project running from start to finish, as they oversee the design and construction, there’s a lower chance the project will run over budget. This method incentivizes the CM to stick to the agreed-upon price since they’re personally liable for any budget increases.
- Reduces the risk of change orders and mistakes during construction. Since the CM contributes to the design phase, they are well versed in the project’s specifications and required equipment and materials.
Disadvantages of CMAR
For owners, the CMAR method presents some downsides.
- More expensive. The CMAR method tends to cost owners more than traditional project delivery methods, as CM fees tend to run higher due to their increased liability and heavy involvement in projects.
- Hinges on the CM’s performance. Because the CM is such a key player in the CMAR method, any errors they make have a direct and consequential effect on the budget, schedule, and project outcome. The owner should take care to select a trustworthy CM who has a successful track record with similar construction projects.
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