CM at Risk in Construction

The construction industry continues to evolve, offering project delivery methods that improve collaboration, reduce financial risk, and increase the chances of completing projects on time and within budget. One such method is CM at Risk, short for Construction Manager at Risk. This delivery model has gained popularity across public and private sectors for its ability to blend early-stage expertise with a cost-guaranteed execution.

But what exactly does CM at Risk in construction mean? How does it work? And what are its advantages and limitations compared to other construction delivery models? This detailed article breaks it all down for industry professionals, project owners, and anyone involved in construction planning.

🏗️ What Is CM at Risk?

CM at Risk (Construction Manager at Risk) is a construction project delivery method where the construction manager acts as both a consultant during the design phase and a general contractor during the construction phase, all while guaranteeing the project will not exceed a specified budget, known as the Guaranteed Maximum Price (GMP).

✅ In essence: The CM at Risk provides preconstruction services and then assumes responsibility for building the project at or below the GMP. If the cost goes over the GMP (excluding change orders), the construction manager bears the cost—not the owner.

This model allows owners to benefit from the CM’s expertise during planning while maintaining price protection during construction.

🔍 Key Characteristics of CM at Risk

To fully understand CM at Risk, it helps to look at its defining traits:

• Early CM involvement during project planning and design
• Open-book accounting practices for cost transparency
• GMP contract structure placing cost overrun risk on the CM
• Two separate contracts: one between the owner and designer, and another between the owner and the CM
• Collaborative environment among owner, designer, and builder

🔁 How CM at Risk Works in Practice

🛠️ 1. Preconstruction Phase

• The CM is hired during or soon after the design team is selected.
• The CM provides:
  • Cost estimates at various design stages
  • Constructability reviews
  • Scheduling and logistics input
  • Value engineering suggestions
  • Procurement strategy for long-lead items

💰 2. GMP Establishment

• Once design is about 60–90% complete, the CM proposes a Guaranteed Maximum Price.
• The GMP includes:
  • Construction costs
  • CM’s overhead and fee
  • Contingency amounts

🚧 3. Construction Phase

• The CM shifts into the builder role, coordinating:
  • Competitive bidding for subcontractors
  • Site management and safety enforcement
  • Progress tracking and quality assurance
  • Cost control to remain within GMP

📊 Table: CM at Risk vs Other Project Delivery Methods

👷 Roles and Responsibilities of a CM at Risk

A CM at Risk must wear multiple hats throughout the life of a construction project.

🔹 During Preconstruction:

• Develop and refine cost models
• Analyze design documents for constructability
• Propose cost-saving alternatives (value engineering)
• Create preliminary schedules
• Forecast and mitigate potential project risks

🔹 During Construction:

• Hire subcontractors via open bidding
• Supervise jobsite operations
• Monitor quality, safety, and compliance
• Maintain updated cost tracking
• Deliver project on time and within GMP

💰 Understanding the Guaranteed Maximum Price (GMP)

The GMP is one of the foundational elements of CM at Risk.

✅ It sets a financial ceiling for the project. If actual costs exceed the GMP and the scope hasn’t changed, the CM absorbs the excess.

If costs come in below the GMP, the savings may:

• Go entirely to the owner
• Be shared between the CM and the owner
• Be retained by the CM (depending on contract terms)

This system encourages cost efficiency and tight project control.

🏆 Advantages of CM at Risk in Construction

✅ 1. Early Contractor Expertise

Bringing the CM in early allows for proactive design reviews, budget shaping, and planning decisions informed by construction know-how.

✅ 2. Budget Predictability

With the GMP established before construction, owners get strong cost control and reduced exposure to price volatility.

✅ 3. Faster Project Delivery

CM at Risk supports phased construction and fast-tracking, since construction can begin before the entire design is finalized.

✅ 4. Collaborative Decision-Making

The tri-party relationship between owner, designer, and CM fosters teamwork and reduces adversarial dynamics.

✅ 5. Fewer Change Orders

Issues are addressed earlier, reducing the number of unexpected changes during construction.

⚠️ Disadvantages of the CM at Risk Model

❌ 1. Potential Conflicts of Interest

Since the CM is both a consultant and a builder, there’s potential to prioritize construction ease over owner benefits.

❌ 2. Higher Initial Costs

The CM’s preconstruction services may raise early-phase costs, though long-term savings often outweigh this.

❌ 3. Complexity in Scope Definitions

If the project scope isn’t clearly defined at GMP negotiation, disputes can occur later.

❌ 4. Contractual Management

The owner must manage two separate contracts, requiring close coordination and oversight.

📘 Legal and Contractual Considerations

Well-defined agreements are crucial in CM at Risk projects. Contracts typically include:

• GMP details and assumptions
• Change order procedures
• Fee structure for preconstruction and construction
• Contingency allowances and usage rules
• Audit and cost transparency provisions
• Dispute resolution methods

Industry-standard contract forms such as AIA A133 (Owner–CMAR) and A201 (General Conditions) are commonly used.

🧭 When to Use CM at Risk

CM at Risk is ideal for:

• Large and complex projects
• Fast-track or phased projects
• Institutional and public buildings requiring transparency
• Owners who want design control but need budget protection

Real-Life Use Cases:

• Hospitals and healthcare: Require precision, compliance, and minimal disruptions.
• Higher education campuses: Multiple buildings, phased timelines, and stakeholder input.
• Transportation terminals: Tight operational constraints and scheduling needs.

🎯 Best Practices for Successful CM at Risk Projects

1. Choose an experienced CMAR with a proven record in similar project types.
2. Define the scope clearly to avoid confusion during GMP establishment.
3. Encourage open communication between all parties from design through delivery.
4. Use open-book accounting for cost transparency and trust-building.
5. Monitor schedules and budgets closely, even with a GMP in place.

📚 Conclusion

CM at Risk in construction represents a flexible, collaborative, and cost-conscious approach to project delivery. By integrating the construction manager early and assigning them financial responsibility through a Guaranteed Maximum Price, this model bridges the gap between planning and execution.

When used effectively, CM at Risk can lead to greater cost control, fewer surprises, and smoother project completion—especially on large, time-sensitive, or high-stakes developments. With the right team, clearly defined contracts, and proactive coordination, CM at Risk becomes a powerful asset in any construction strategy.

❓ Frequently Asked Questions (FAQs)

Q1. What does CM at Risk stand for?

A: CM at Risk stands for Construction Manager at Risk, a project delivery method where the construction manager guarantees project completion within a set budget (GMP).

Q2. How is CM at Risk different from design-bid-build?

A: Unlike design-bid-build, where the builder is selected after design completion, CM at Risk involves the builder early and provides a Guaranteed Maximum Price before construction starts.

Q3. Who manages subcontractors in CM at Risk?

A: The Construction Manager (CMAR) is responsible for hiring and managing subcontractors, typically using a competitive bidding process.

Q4. What is the benefit of a GMP in CM at Risk projects?

A: GMP ensures budget certainty for the owner. If project costs exceed the GMP, the CMAR absorbs the overage (unless the scope changes).

Q5. Is CM at Risk more expensive than other methods?

A: It may involve higher upfront costs due to preconstruction services but often saves money through better planning, fewer delays, and reduced change orders.

Q6. Can CM at Risk be used for public sector projects?

A: Yes, it is widely used in public infrastructure, schools, and government buildings where transparency and cost control are essential.

Q7. Is CM at Risk the same as design-build?

A: No. In CM at Risk, the designer and CM are separate entities. In design-build, one entity handles both design and construction under a single contract.