Is Construction Management at Risk the Right Project Delivery Method for You?
This is Part Four of a six-part series on Project Delivery Methods. We want to arm you with the information you need to make informed decisions to set up your project for success. Throughout this series, we’ll be deep-diving into the project delivery method, selecting your team, and what contracts you’ll need.
Why does the Project Delivery Method that you choose matter? Because as an owner, you need to be informed of what options are available to you. That way you can select the best one to fit your project. After considering all the factors, is Construction Management at Risk the right Project Delivery Method for you? Let’s dive in and see!
The Construction Management at Risk Team
Construction Management at Risk (CMAR, CM @ Risk) is also known by the AIA as Construction Manager as Contractor (CMc). The construction manager is brought on early in the process, often during the planning phase with the architect. The architect then engages the engineering team and any other specialty consultants and advances the design. Towards the end of the design advancement, the construction management firm brings on their Key Trade Partners (listed in the graphic as Contractors). Those partners help provide additional detail to the cost estimating, the budget, and the schedule that have been analyzed since the beginning of the planning process by the construction manager.
The costs for a Construction Management at Risk project are known before the end of the bidding process. And often, owners will require a Guaranteed Maximum Price (GMP) be established by the construction management contractor and execute the contract that is associated with that. Establishing a GMP isn’t required, but it can be useful if an owner has a cost-control concern.
During construction, the key trade partners (or contractors) are then brought on board to execute the project.
The key attribute of Construction Management at Risk
The key attribute for the Construction Management at Risk delivery method, is that there is a single construction manager/contractor providing the construction management services on pre-construction and also completing the construction during the Construction Phase of the project.
This gives the construction manager/contractor responsibility and control over the construction work via direct contracts with the subcontractors, very similar to Design-Bid-Build. The Construction-Phase services are paid on the basis of cost + cost of the work + a fee. That applies with or without an established GMP.
As with Construction Management Multi-Prime and Design-Bid-Build, the owner warrants the sufficiency of the plans and the specifications to the construction manager.
What contracts will you need?
In a Construction Management at Risk project, the owner, as in all cases, contracts directly with their owner-direct consultants. The owner also contracts directly with the architect who then has consultants and sub-consultants. Finally, the owner contracts directly with the construction management firm as contractor. The construction management firm then contracts with their subcontractors in the project.
Is Construction Management at Risk the right delivery method for you?
What factors should you consider when trying to differentiate delivery systems? There are five areas that we like to look at:
Owner Involvement. For Construction Management at Risk, the designer works directly for the owner (similar to the Multi-Prime and Design-Bid-Build methods).
Accountability. The construction manager acts as an agent of the owner. This is very different from Design-Bid-Build. The construction manager is an agent of the owner, in addition to being your general contractor. It’s also important to note that there is no contractual relationship between the contractors and the architect.
Cost control. The owner has a higher level of cost control than in other delivery methods because of the establishment of a Guaranteed Maximum Price. There’s also the benefit that comes from early contractor involvement and the expertise that brings to the project.
Timeline. This method is typically faster than Design-Bid-Build.
Risk assignment. The owner in this case is still warranting the sufficiency of the plans and specs to the construction manager.
What factors are you prioritizing on your project? Is Construction Management at Risk the right delivery method for you? Contact us if you're ready to discuss your Project Delivery Method needs!