What Is a Construction Manager at Risk in Construction?

In modern construction, selecting the right project delivery method can make the difference between success and cost overruns, delays, or miscommunication. One increasingly popular approach is the Construction Manager at Risk (CMAR) method. Known for combining collaboration with cost certainty, CMAR is commonly used in both public and private sector projects to reduce risks while maintaining flexibility and control.

So, what is a Construction Manager at Risk in construction? In this article, we’ll break down the definition, explain how the process works, examine its advantages and disadvantages, and explore when CMAR is the best fit for a construction project.

🏗️ Definition: What Is a Construction Manager at Risk?

A Construction Manager at Risk (CMAR) is a construction project delivery method where the construction manager acts as both:

• A consultant during the preconstruction (design) phase, and
• A contractor during the construction phase.

What distinguishes CMAR from other delivery methods is that the construction manager guarantees to deliver the project within a specified budget known as the Guaranteed Maximum Price (GMP).

✅ Key Concept: The CMAR assumes the financial risk for delivering the project within the GMP. If costs exceed this cap (and there are no changes to the scope), the CMAR absorbs the overrun.

🔍 CMAR vs. Traditional Project Delivery Methods

To better understand the role of a Construction Manager at Risk, let’s compare it to traditional delivery methods.

🔁 How Does the CMAR Process Work?

The CMAR method is a two-phase approach:

🛠️ 1. Preconstruction Phase

• The CMAR is selected early and provides input during the design process.
• Offers constructability reviews, cost estimates, value engineering, and scheduling advice.
• Helps identify potential risks and long-lead items.
• Supports early budgeting decisions to avoid rework or surprises later.

💰 2. Construction Phase

• A Guaranteed Maximum Price (GMP) is established based on detailed design documents.
• The CMAR transitions into the role of general contractor and manages:
  • Subcontractor bidding
  • On-site operations
  • Safety
  • Quality control
  • Budget adherence

If actual costs exceed the GMP, the CMAR covers the overage, provided the project scope hasn’t changed.

💵 What Is a Guaranteed Maximum Price (GMP)?

The GMP is a contractual cap on the total construction cost. It includes:

• Direct construction costs (labor, materials, equipment)
• CMAR’s fee
• Contingencies
• Overhead and general conditions

If the project is completed under the GMP, savings can be returned to the owner or shared with the CMAR, depending on the contract agreement.

This setup incentivizes cost control and efficiency.

👷‍♂️ Roles and Responsibilities of a CMAR

The Construction Manager at Risk performs dual roles in the project lifecycle:

During Preconstruction:

• Review and improve design documents
• Provide cost estimates and budget control
• Offer alternatives for cost or time savings
• Help plan procurement strategy
• Provide risk analysis and mitigation suggestions

During Construction:

• Select and supervise subcontractors
• Coordinate site logistics and construction sequencing
• Manage timeline and milestones
• Enforce quality and safety standards
• Provide financial reporting and control

📊 Pros and Cons of Using CMAR in Construction

✅ Advantages

1. Early Collaboration
   • The CMAR is involved during design, allowing them to contribute to decisions that impact cost, schedule, and feasibility.
2. Cost Certainty
   • The GMP offers a financial cap, giving owners predictability and peace of mind.
3. Faster Delivery
   • Projects can be fast-tracked, with construction beginning before design is 100% complete.
4. Reduced Change Orders
   • Preconstruction involvement reduces the likelihood of expensive changes or surprises during construction.
5. Transparency
   • Open-book accounting allows the owner visibility into actual costs and subcontractor bids.

❌ Disadvantages

1. Complex Contract Management
   • Owners must manage separate contracts with the designer and CMAR, requiring strong coordination.
2. Potential for Conflicts of Interest
   • The CMAR may be incentivized to make recommendations that benefit their construction role rather than the owner’s goals.
3. Higher Preconstruction Costs
   • Engaging a CMAR early may result in additional upfront costs for services provided before construction begins.
4. GMP Disputes
   • Ambiguity in scope definitions can lead to disagreements over what is included in the GMP.

🧾 Legal Considerations for CMAR Projects

The CMAR approach requires well-drafted contracts that clearly define:

• Scope of services
• GMP breakdown and inclusions
• Fee structures
• Risk allocation and liability
• Shared savings (if applicable)
• Procedures for change orders
• Dispute resolution mechanisms

Standard contract forms such as the AIA A133 (owner–CMAR) and AIA A201 (general conditions) are often used.

🏫 When Is CMAR the Right Fit?

CMAR is especially well-suited for:

• Complex or large-scale projects with multiple stakeholders
• Projects with strict budget constraints where cost predictability is crucial
• Public-sector projects where transparency and risk mitigation are necessary
• Fast-track projects needing phased construction

Real-World Examples:

• Hospitals and Healthcare Facilities
  • Require specialized systems, phasing, and precise timelines.
• University Buildings
  • CMAR helps balance budget and academic calendar deadlines.
• Airports and Infrastructure
  • Involves coordination across agencies, safety priorities, and operational timelines.

🎯 Best Practices for Successful CMAR Implementation

1. Select an Experienced CMAR
   • Choose firms with proven performance in similar projects.
2. Define Project Scope Early
   • Clear scope reduces ambiguity and dispute risk over GMP.
3. Foster Open Communication
   • Regular meetings between owner, designer, and CMAR improve collaboration.
4. Use Transparent Accounting
   • Open-book practices build trust and ensure accurate budgeting.
5. Clarify Risk Allocation in Contracts
   • Define who is responsible for delays, cost overruns, and unforeseen conditions.

📚 Conclusion

A Construction Manager at Risk in construction is much more than a contractor—they are a trusted partner who guides the project from early design through final completion, all while accepting financial risk for budget compliance. By engaging the CMAR early, owners benefit from better planning, fewer surprises, and increased cost certainty.

This method provides an ideal balance between design flexibility, fiscal responsibility, and schedule acceleration—making it a powerful choice for today’s complex construction projects.

❓ Frequently Asked Questions (FAQs)

Q1. What does a Construction Manager at Risk do?

A: A CMAR provides preconstruction advice during the design phase and then manages construction, guaranteeing project completion within an agreed-upon budget (GMP).

Q2. What is the difference between CMAR and a general contractor?

A: A general contractor is typically hired after design is complete and works on a fixed-price or bid basis. A CMAR is involved early in design and provides input, then transitions into managing the build under a GMP contract.

Q3. Is CMAR more expensive than other delivery methods?

A: Not necessarily. While preconstruction services may add initial costs, CMAR often results in savings through reduced change orders, faster delivery, and fewer disputes.

Q4. Who manages subcontractors in a CMAR project?

A: The CMAR is responsible for hiring and supervising subcontractors, typically through a competitive bidding process.

Q5. Can CMAR be used in public construction projects?

A: Yes. Many public agencies use CMAR due to its transparency, competitive bidding for trades, and budget control via GMP.

Q6. What are the risks in CMAR contracts?

A: Risks include disputes over scope definitions, potential cost overruns beyond GMP exclusions, and the possibility of conflicts between CMAR’s advisory and construction roles.

Q7. Is CMAR the same as design-build?

A: No. In design-build, the designer and contractor are a single entity under one contract. In CMAR, the owner hires a designer and CMAR separately but benefits from early construction input.