Construction Manager at Risk Definition in Construction

In the world of construction project delivery methods, one approach has steadily gained popularity for its balance of cost control, risk management, and collaboration: Construction Manager at Risk (CMAR). Commonly used in both public and private sector projects, CMAR is a hybrid method that combines aspects of both design-bid-build and design-build while providing the owner with a guaranteed maximum price (GMP).

Understanding what Construction Manager at Risk means—and how it compares to other delivery systems—is essential for construction professionals, project owners, architects, and contractors. This article will dive deep into the definition, roles, processes, benefits, risks, and legal considerations of the CMAR method in construction.

🏗️ What Is a Construction Manager at Risk (CMAR)?

Construction Manager at Risk (CMAR) is a project delivery method where a construction manager (CM) acts as a consultant to the owner during the design phase but also takes on the risk of delivering the project within a Guaranteed Maximum Price (GMP).

In essence, the CMAR serves a dual role:

1. Pre-construction advisor: Providing cost estimates, constructability reviews, value engineering, scheduling input, and bidding assistance.
2. Construction general contractor: Overseeing the actual building process and guaranteeing the cost and schedule.

✅ Key Point: In CMAR, the construction manager commits to completing the project for no more than a specified price (GMP), even if actual costs exceed that amount—assuming the scope doesn’t change.

🧩 Core Features of the CMAR Method

• Early involvement of the CM: Unlike traditional methods where the contractor is brought in after design, in CMAR the construction manager is involved during the design phase, providing crucial input.
• Guaranteed Maximum Price (GMP): The CM guarantees the project will not exceed an agreed-upon maximum price.
• Open-book pricing: The CM often uses open-book accounting, sharing cost data transparently with the owner.
• Competitive trade contractor bidding: Subcontractors are typically selected through a competitive bidding process, even though the CMAR is not chosen through low-bid selection.

📊 Comparison Table: CMAR vs. Other Project Delivery Methods

🧠 Key Responsibilities of a Construction Manager at Risk

The CMAR wears multiple hats during the project lifecycle:

1. Pre-Construction Phase

• Reviewing and advising on the design documents
• Preparing detailed construction cost estimates
• Developing value engineering proposals
• Identifying long-lead items
• Constructability review
• Preparing a preliminary project schedule

2. Construction Phase

• Procuring subcontractors (often via bidding)
• Managing subcontractor coordination
• Overseeing quality control and safety
• Ensuring compliance with the GMP and schedule
• Reporting project progress to the owner

💰 Guaranteed Maximum Price (GMP): The Risk Element

One of the most defining aspects of CMAR is the GMP, which protects the owner from cost overruns. If actual costs exceed the GMP, the construction manager absorbs the loss, unless it is due to change orders or unexpected owner decisions.

However, if the project comes in under the GMP, any savings may be:

• Returned entirely to the owner,
• Split between the owner and CMAR,
• Or kept by the CMAR—depending on the contract agreement.

🏆 Advantages of Construction Manager at Risk

Using the CMAR method offers several unique benefits:

✅ Early Collaboration

Owners benefit from early construction input during design, helping reduce potential design errors and rework.

✅ Cost Predictability

The GMP provides a predictable maximum cost, which is particularly useful for public and institutional projects with limited budgets.

✅ Improved Scheduling

CMAR allows fast-tracking—the project can move forward before the entire design is complete.

✅ Quality Control

With the CMAR actively involved from the beginning, quality oversight is enhanced from start to finish.

✅ Flexibility

Unlike design-build, the owner can retain control over the design while still benefiting from contractor input.

⚠️ Disadvantages and Risks of CMAR

Despite its advantages, the CMAR model is not without risks:

❌ Potential for Conflicts of Interest

Since the CMAR advises on design but also builds the project, there can be tension between recommending the best options vs. what’s most profitable.

❌ Cost Disputes

If the scope is not clearly defined, disputes over what is and isn’t included in the GMP may arise.

❌ Reliance on CMAR Expertise

The success of the project heavily depends on the competence and honesty of the CMAR firm.

🏛️ Legal and Contractual Considerations

CMAR contracts typically fall under American Institute of Architects (AIA) CM-at-Risk documents or custom public-sector versions. These contracts include:

• Definition of GMP
• Allowable cost clauses
• Shared savings arrangements
• Risk and insurance requirements
• Dispute resolution mechanisms

It is critical that the project scope, design expectations, cost categories, and responsibilities be clearly spelled out in the contract to avoid disputes.

🧭 When to Use CMAR

CMAR is especially useful in the following scenarios:

• Large or complex projects that benefit from early contractor input
• Public or institutional buildings where accountability and budget control are essential
• Projects requiring fast-tracking, such as emergency response or school construction
• Projects where owners want design control but still desire contractor involvement

🏗️ Real-World Examples of CMAR Projects

• Healthcare facilities: Complex MEP systems and phased occupancy make CMAR ideal.
• University campuses: Budget constraints and flexibility in design make CMAR advantageous.
• Government buildings: Transparency, budget control, and risk management are critical.

✅ Best Practices for CMAR Success

1. Choose an experienced CMAR with a proven record in similar projects.
2. Establish clear lines of communication between owner, designer, and CMAR.
3. Define the GMP early and clearly outline what’s included.
4. Encourage collaboration across all phases of the project.
5. Regularly review project progress and budget alignment.

📚 Conclusion

Construction Manager at Risk is a powerful project delivery method that blends design flexibility, cost predictability, and risk management. By bringing the construction manager into the process early, owners benefit from seasoned insight and reduced uncertainty. While not suitable for every project, CMAR has become a preferred method for many complex and high-stakes builds—especially where time, cost, and quality all matter deeply.

❓ Frequently Asked Questions (FAQs)

Q1. What is the main difference between CMAR and design-build?

A: In CMAR, the owner has separate contracts with the designer and construction manager, retaining more design control. In design-build, design and construction are combined under one contract, reducing owner involvement in the design process.

Q2. Is CMAR more expensive than traditional construction methods?

A: Not necessarily. While CMAR may have higher preconstruction costs, it often reduces change orders and rework, leading to potential savings in the long run.

Q3. Who holds the construction contract in a CMAR project?

A: The owner signs a single contract with the construction manager at risk, who is responsible for subcontractor procurement and overall construction.

Q4. What is a Guaranteed Maximum Price (GMP)?

A: It is the maximum amount the owner will pay for the project. If the actual construction cost exceeds this price, the CMAR covers the difference—unless there are approved change orders.

Q5. Can CMAR be used in public sector projects?

A: Yes, CMAR is increasingly used in public projects, especially for schools, hospitals, and civic buildings, as it offers cost transparency and risk mitigation.

Q6. What qualifications should a CMAR have?

A: A solid track record, experience in similar projects, financial stability, transparent pricing practices, and strong preconstruction services are essential.

If you’re considering CMAR for your next project, weighing the benefits, risks, and legal implications is key to making the right decision.