Traditionally, the design-bid-build project delivery method was favored by private and public owners. This offers cost-efficient decisions at two major points in the project. Another project delivery method that’s taken shape over the past few years is the construction-manager-at-risk (CMAR) method. The CMAR project delivery method, in short, provides the same opportunities for cost-savings while providing a single point of contact for the owner or developer.
How the CMAR Project Delivery Method Works
Construction project owners commonly develop requests for proposal (RFPs) for both the CMAR and design at the same time. However, most owners interview and select the CMAR prior to selecting the project’s designer. If the CMAR agrees and executes the pre-construction agreements, he or she may assist in the designer selection. An experienced CMAR may also suggest designers who would be good fits for a particular project. With this project delivery method, owners and developers are often free to select the designer on desired criteria—which may or may not be the lowest responsible bid.
After the chosen designer agrees to the other major pre-construction project, the CMAR determines the Guaranteed Maximum Price (GMP). The GMP is arguably the most attractive feature offered by a CMAR project delivery method. In most cases, the CMAR assumes all financial liabilities exceeding the GMP threshold. There are occasionally exceptions to this rule—most notably change orders. CMARs often include wiggle room for contingencies in their service price.
During construction, the CMAR essentially acts as a consultant to the owner or developer. Because the CMAR assumes most financial obligations exceeding the GMP, he or she is keen to keep costs down. The owner or developer can therefore enjoy a less hands-on approach to managing the project while having peace of mind that his or her wishes are being advocated for.
Potential Drawbacks of the CMAR Project Delivery Method
One major pitfall of CMAR arrangements is that owners or developers often mistakenly believe the construction manager will assume every financial liability exceeding the GMP. Mistakes in pre-construction contracts can result in price overages that must be absorbed by the project owner or developer.
It’s also important to insert the CMAR at the right time. Having your design team come up with a blueprint without the input of the CMAR could be a huge risk, as the design team may not be willing to make changes the CMAR suggests. At any stage, the owner and CMAR need to be on the same page; not communicating the owner’s input could be catastrophic for all parties.
In many ways, the construction-manager-at-risk project delivery method is a more cost-efficient way of executing the design-build delivery method. Using the design-build or design-bid-build project delivery method is preferred by many owners and developers, but the CMAR method is often worth considering. Finding the right CMAR and crafting effective contracts is essential for a successful project.
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