At Risk Construction Management Definition in Construction

In the fast-paced world of construction, delivering a project on time and within budget is often a challenge. Owners and stakeholders are increasingly turning to alternative project delivery methods that offer greater control, transparency, and cost predictability. One such method is At Risk Construction Management, a model that blends early involvement of the construction manager with financial accountability for project costs.

Understanding the at risk construction management definition in construction is essential for developers, contractors, architects, and public agencies alike. This article will explain what at risk construction management is, how it functions, why it’s used, and what benefits and challenges it presents.

🏗️ What Is At Risk Construction Management?

At Risk Construction Management, commonly known as Construction Manager at Risk (CMAR), is a project delivery method where the construction manager (CM) is involved from the early design phase and later commits to delivering the project within a Guaranteed Maximum Price (GMP).

✅ In this model, the CM not only offers preconstruction consulting but also takes on the financial risk for completing the project on time and within budget.

Unlike traditional methods where the contractor is engaged after design completion, At Risk Construction Management allows for collaborative planning between the CM, architect, and owner—resulting in better project outcomes and fewer surprises during construction.

📖 Formal Definition

At Risk Construction Management is a project delivery method where a construction manager provides advisory services during the design phase and then assumes the role of the general contractor, delivering the project for a guaranteed maximum price, thus taking on the cost risk for overruns not caused by scope changes.

🔄 How At Risk Construction Management Works

The at risk model works in two major phases:

🛠️ 1. Preconstruction Phase

• The CM is hired early to work alongside the design team.
• Provides services such as:
  • Cost estimating and budgeting
  • Constructability reviews
  • Value engineering
  • Scheduling and phasing strategies
  • Procurement planning

🧱 2. Construction Phase

• Once design reaches an advanced stage (typically 60–90%), the CM proposes a Guaranteed Maximum Price (GMP).
• Upon agreement, the CM becomes responsible for:
  • Bidding and hiring subcontractors
  • Coordinating site work and logistics
  • Managing cost, quality, safety, and schedule
  • Delivering the project within the GMP

📊 Table: At Risk Construction Management vs Other Methods

🧰 Responsibilities of the At Risk Construction Manager

The CM in this model plays a dual role—first as a design-phase advisor and later as the builder. Key responsibilities include:

During Preconstruction:

• Providing detailed and updated cost estimates
• Suggesting cost-effective alternatives (value engineering)
• Identifying potential design and constructability issues
• Coordinating long-lead item procurement
• Collaborating with the design team for optimized outcomes

During Construction:

• Hiring and managing subcontractors
• Ensuring safety, quality, and compliance
• Tracking the budget and controlling costs
• Managing project documentation and reporting
• Adhering to the agreed project schedule

💵 Understanding Guaranteed Maximum Price (GMP)

At the heart of at risk construction management is the GMP—a ceiling price that the CM commits to. The owner is protected from paying above this amount unless there are approved changes or unforeseen conditions not included in the original scope.

🔒 If project costs exceed the GMP, the CM is responsible for covering the overrun, not the owner.

Any savings below the GMP may:

• Be returned to the owner
• Be shared between the owner and CM
• Be retained by the CM, based on contract terms

✅ Advantages of At Risk Construction Management

1. Early Budget Certainty

Budget input during design helps shape realistic costs early, minimizing surprises.

2. Risk Transfer to CM

The CM absorbs cost overruns beyond the GMP, reducing the owner’s financial exposure.

3. Faster Delivery

Phased construction and early procurement allow for overlapping design and build tasks.

4. Fewer Change Orders

Issues are identified and resolved in preconstruction, lowering the risk of costly mid-project changes.

5. Transparent Cost Control

Owners benefit from open-book accounting with full visibility into pricing, bidding, and actual costs.

⚠️ Challenges of At Risk Construction Management

❌ 1. Complexity in GMP Negotiation

If the scope is not well-defined before GMP is finalized, disputes may arise.

❌ 2. Higher Early-Phase Costs

Preconstruction services require payment before construction begins.

❌ 3. Dual Role Conflicts

The CM’s advisory and contractor roles may occasionally be at odds if incentives aren’t well-aligned.

❌ 4. More Owner Oversight Needed

The owner must manage two separate contracts: one with the designer and another with the CM.

📘 Legal Considerations and Contract Structure

Clear legal agreements are essential for CMAR to function properly. Standard contract components include:

• Detailed GMP clause
• Scope definitions
• Change order protocols
• Fee structures and markups
• Shared savings provisions
• Audit and transparency clauses
• Bonding, insurance, and dispute resolution procedures

Common contract forms:

• AIA A133 – Owner/Construction Manager Agreement (with GMP)
• AIA A201 – General Conditions of the Contract

🧭 When to Use At Risk Construction Management

This model is best suited for:

• Large-scale or complex projects
• Projects with fixed budgets or limited contingencies
• Public sector or institutional facilities
• Renovations in operational environments
• Projects requiring fast-track or phased delivery

🎯 Best Practices for Success

1. Hire Early
   Engage the CM during design inception to maximize their input on cost and constructability.
2. Finalize Scope Before GMP
   Avoid scope gaps and pricing conflicts by ensuring design clarity at GMP stage.
3. Promote Transparency
   Establish open-book procedures and audit rights to ensure owner trust and oversight.
4. Use Incentives
   Include performance-based rewards to encourage on-budget and early delivery.
5. Maintain Collaboration
   Foster continuous communication between the owner, CM, and design team.

📚 Conclusion

The at risk construction management definition in construction refers to a hybrid delivery method where the construction manager is involved early in project planning and assumes responsibility for delivering the work within a Guaranteed Maximum Price. This approach is particularly effective in reducing owner risk, improving scheduling flexibility, and enhancing cost control.

By combining the technical knowledge of a general contractor with the planning expertise of a preconstruction advisor, the CMAR model delivers more reliable and collaborative outcomes—especially for complex or time-sensitive builds. While it requires a proactive owner and detailed contractual structure, the advantages in budget certainty, transparency, and reduced change orders make At Risk Construction Management a preferred method in today’s construction industry.

❓ Frequently Asked Questions (FAQs)

Q1. What is at risk construction management?

A: It’s a project delivery method where a construction manager provides preconstruction services and guarantees project delivery within a set budget (GMP), assuming the financial risk for cost overruns.

Q2. How does at risk construction management differ from traditional contracting?

A: In traditional models, the contractor is hired after design completion. In at risk construction management, the CM is involved during design and takes on financial risk via the GMP.

Q3. What is the main benefit of the CMAR method?

A: Cost predictability. The GMP gives the owner budget certainty and shifts the cost overrun risk to the construction manager.

Q4. Who hires the subcontractors in CMAR?

A: The CM is responsible for bidding, hiring, and managing subcontractors throughout the construction phase.

Q5. Is CMAR suitable for public-sector projects?

A: Yes, it is commonly used in public and institutional construction due to its transparency, accountability, and faster timelines.

Q6. What happens if the project cost goes beyond the GMP?

A: Unless caused by approved scope changes or unforeseen site conditions, the construction manager bears the excess cost.

Q7. Can at risk construction management be used on small projects?

A: It’s most effective on mid-size to large projects where the benefits of early planning and budget control outweigh the administrative complexity.