Water Design-Build Council Blog

What Is Construction Management-At-Risk (CMAR)?

30297031_s.jpgIf you’re an owner looking to engage in a more collaborative delivery process (than that of design-bid-build), but not confident that your organization is prepared to pursue a design-build procurement process, then the delivery method identified as Construction Management at-Risk (CMAR) could be the right fit for your project.

With the CMAR delivery method, the owner first selects and retains the design firm, similar to a design-bid-build project. Selecting the design firm can be based on price, qualifications and any other criteria desired by the owner.

The difference with the CMAR approach is that once the designer is selected, the project moves forward with the early stages of the design process; but with the intent of initiating a second contract with a construction manager when the design process is within a range of 30 to 60 percent of the development.

This separate step represents an important action by the owner (who has oversight of the entire process) to ensure that the CMAR firm (construction manager) and selected designer have the opportunity to develop an immediate and strong, collaborative working relationship on behalf of the owner.

The advantages of procuring and contracting with a CMAR firm early in the design phase are numerous.  First, the CMAR can assume the role of a construction consultant and assist with value engineering, cost estimating and constructability reviews. 

Second, because the CMAR has begun working as part of a collaborative team with the owner and designer, there is the opportunity to overlap the traditionally distinct phases of design and construction – such as initiating acceleration of the construction schedule through early start packages for construction activities such as excavation and site dewatering prior to final design.

Another advantage of CMAR delivery is the cost certainty that can be provided at an early stage of the project. Most CMAR projects require the contractor to provide a Guaranteed Maximum Price (GMP) somewhere within the 60 to 90 percent design phase of the project.

It is at this point in the project that the “at risk” portion of CMAR comes in. The CMAR assembles a GMP largely based on subcontractor bids, plus contingencies and allowances. The CMAR then communicates the anticipated cost of the project based on the design in hand, but they are financially liable if the project exceeds that amount. If the project is completed for less than the GMP, there is generally a cost sharing agreement in place.

There is also the possibility that the project could encounter scope changes which could result in a change order leading to an increase in the GMP, but this would be discussed collaboratively by the Owner and CMAR Project Team.

The CMAR works closely with the designer and the owner to determine the desired “bid packages” for all aspects of the project - ranging from items such as landscaping and architectural finishes to process equipment, mechanical and electrical disciplines. Because the CMAR is financially at risk, they have the option to select pre-qualified subcontractors that may not be the low bidder, but can offer superior quality and complete their portion of the work on time.

Some CMAR firms may even use their own resources and self-perform portions of the work, which could ultimately benefit the overall project. Of course, because laws and regulations vary from state to state, the CMAR may be precluded from self-performance. Even so, it is important to note that the CMAR, the owner and the designer work collaboratively in selecting the desired subcontractors for each of the individual bid packages.

Within the construction stages of the project, the CMAR manages the individual bid packages and coordinates all construction activities on the project. The CMAR is the advocate for the Owner and primarily responsible for the complete management of the project, regardless of whether or not they are self-performing any aspects of the construction.  

Through an “open book” process, the project’s financial accounting allows the owner to see all costs associated with the project, as the CMAR will share information regarding subcontractor contracts and billing with the entire project team.

In conclusion, developing and maintaining a strong collaborative working relationship between the owner, the designer and the CMAR firm yields positive results including reduced change orders, higher quality of construction, improved communication, accelerated schedule and increased cost certainty throughout the life of the project.

It is our experience that owners generally find the collaborative relationships to be more trusting and non-adversarial in a CMAR project, which can be especially beneficial when constructing complex projects with tight schedules.

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Topics: CMAR