Advantages of CM at Risk

Advantages of CM at Risk

Construction foremen review plans on digital tablet
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Construction management at Risk, or CM at Risk, is an innovative approach to construction project delivery. CM at risk presents a cost-effective alternative to the traditional design-bid-build process. The CM at risk will save your money by reducing the time in your construction project. The CM at risk can be 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 on which the construction management firm act 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 CM at Risk, so it will be empowered to contract multiple subcontractors and will be acknowledged as the sole point of responsibility for the project delivery. During this process, the CM at risk will possess the risk of hiring the subcontractors that will eventually be developing the project.

A CM at risk will normally try 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 CM’s at Risk 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 CM at risk. The CM at risk firm might also be responsible for assisting the owner in the following areas:

  • Construction Schedule
  • Project Budget
  • Cash Flow Analysis
  • Discussion and acceptance of Means and Methods
  • Value Engineering
  • Cost Projects

During the early stages of the project, the focus of the CM at risk will be on the cost control and schedule coordination, but once the project kicks off, its role will turn into design and constructability issues. The CM at risk might always try to offer the owner the Guaranteed Maximum Price (GMP) alternative.

Benefits of CM at Risk

The CM at risk would offer the owner the following benefits:

  • Project risk is passed to the CM, reducing the potential owner's risks
  • Manage and find alternative and balanced construction schedules
  • Full pre-construction services available
  • Value engineering and cost analysis with the alternative of the GMP.
  • The engineer of record can be designed as the CM at risk firm
  • Reduce the construction time and will be the liaison between the A/E and the construction manager.
  • Offer another professional and expert that will be focused on the construction progress
  • Increase level of participation between the A/E, contractor and the owner
  • Increased cost control as the construction budget will be discussed as an open book relationship with the owner.
  • Prepare bid packages
  • Prepare conceptual and detailed estimates
  • Utilize Building Information Modeling (BIM) to ensure constructability of the design while minimizing cost and schedule
  • Assist the Owner in closing out the various contracts and provide records for retention

CM at Risk Disadvantages

The CM at risk will also present some issues that might be worthwhile to discuss. The most important disadvantages are:

  • Design team may not take input from CM during design
  • Perception that price competition is limited
  • It 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.