Advantages of Construction Management at Risk (CM at Risk)
Construction management at risk, also known as CM at risk or CMAR, is an innovative approach to construction project delivery. Engagement of a CMAR presents a cost-effective alternative to the traditional design-bid-build process by, among other things, reducing the time in your construction project. The post assignee is most often a general construction contractor with technical and financial capabilities appropriate to the project.
Role of the CM at Risk
The CM at risk is a delivery approach in which a construction management firm acts as an owner's consultant during the pre-development phase of the project. During this process, the owner of the project will rely on the CMAR, so it is empowered to contract multiple subcontractors and is acknowledged as the sole point of responsibility for the project delivery. During this process, the CMAR possesses the role of hiring the subcontractors who will eventually develop the project. A CMAR will normally work to establish a GMP or guaranteed maximum price from subcontractors once the project has been designed.
The final construction price is the sum of the CMAR's fee, the subcontractors’ bids, and allowances. The owner will not pay more than the GMP and retains a portion of savings.
CM at Risk Services
The CM at risk is responsible for managing all subcontracts during the pre-development stage, and the owner might also want to transfer additional responsibilities to the CMAR. The CMAR firm might also be responsible for assisting the owner in the following areas:
During the early stages of a project, the focus of the CM at risk will be on cost control and schedule coordination, but once the project kicks off, its role will turn to design, structure and execution issues.
Benefits of CM at Risk Engagement
Engaging a CM at risk offers the owner the following benefits:
- Many aspects of project risk execution are passed to the CMAR, reducing the owner's potential overall risks.
- Development and management of alternative, balanced construction schedules
- Full pre-construction services availability
- Value engineering and cost analysis with the alternative of the GMP
- CM at risk firm may also serve as Engineer of Record for a project.
- Construction time reduction
- CMAR may serve as the de facto liaison between the Architect-Engineer and onsite Construction Manager.
- Another professional expert focused on the construction progress
- Increased level of participation between Architect-Engineer, contractor and, owner
- Increased cost control and accountability as the construction budget will be discussed as an open book relationship with the owner
- Bid package preparation
- Conceptual and detailed estimates preparation
- Building Information Modeling (BIM) utilization to ensure constructability of the design while minimizing cost and schedule
- Facilitation in closing out various contracts and records provision & retention
CM at Risk Disadvantages
The CM at risk may also present some issues deserving consideration as well. The most important disadvantages include:
- The design team may not take input from CM during design.
- The perception that price competition is limited
- Such a relationship might not work perfectly on smaller projects.
- During the early stages of the project and before the GMP has been established, there is sometimes ambiguity concerning the scope of work included under the GMP.
- The owner may be financially liable for exclusions and inconsistencies in the contract documents.