What Is Construction Manager at Risk in Construction?

In the modern construction industry, project delivery methods are evolving to offer more collaboration, cost certainty, and schedule control. Among these, one approach stands out for balancing the responsibilities between owners and contractors while minimizing financial surprises: Construction Manager at Risk (CMAR). Understanding what is construction manager at risk in construction is essential for stakeholders looking to manage complex builds with precision and predictability.

This article explores the CMAR concept in-depth, detailing how it works, its key benefits, potential risks, and how it compares to other delivery systems.

🏗️ What Is Construction Manager at Risk (CMAR)?

A Construction Manager at Risk (CMAR) is a project delivery method where the construction manager (CM) is hired early in the design phase to provide input on costs, scheduling, and constructability. As the project progresses, the CM assumes the role of the general contractor and agrees to complete the project for a Guaranteed Maximum Price (GMP)—thus taking on the financial risk for cost overruns that are not due to scope changes or unforeseen conditions.

✅ CMAR merges consultative services during design with construction execution, and ensures the project doesn’t exceed a pre-agreed price.

This hybrid approach promotes collaboration between the owner, architect, and contractor from the outset, resulting in fewer delays, better budgeting, and improved overall efficiency.

📖 Formal Definition

Construction Manager at Risk (CMAR) is a construction delivery method in which a CM is involved early in design, offers input and preconstruction services, and then undertakes the role of builder, committing to a Guaranteed Maximum Price (GMP) and assuming risk for cost overruns.

🔁 How CMAR Works in Practice

The CMAR model is implemented in two main phases:

1. Preconstruction Phase

• CM is brought on board before design is finalized.
• The CM provides:
  • Cost estimation
  • Constructability reviews
  • Schedule planning
  • Value engineering
  • Risk mitigation strategies
• Collaboration with the architect and owner allows design improvements and budget alignment.
• A Guaranteed Maximum Price (GMP) is negotiated based on current design documents.

2. Construction Phase

• CM transitions into the general contractor role.
• Responsible for:
  • Hiring and managing subcontractors
  • Procuring materials and services
  • Coordinating construction schedules
  • Ensuring quality and safety
  • Delivering the project within the GMP

📊 Comparison Table: CMAR vs Other Delivery Methods

🧰 CMAR Roles and Responsibilities

The Construction Manager at Risk serves both as an advisor and builder throughout the life of the project. Here’s a breakdown of their duties:

Preconstruction Duties:

• Advise on project costs during design development
• Assist in material selection and specifications
• Suggest alternative methods to reduce time/costs
• Help mitigate risks early in the process
• Develop preliminary schedules and logistics plans

Construction Duties:

• Act as the general contractor
• Select, contract, and manage subcontractors
• Coordinate site operations, safety, and inspections
• Track progress and budget against GMP
• Deliver the project within contractual deadlines

💵 Understanding the Guaranteed Maximum Price (GMP)

The Guaranteed Maximum Price (GMP) is the central feature of the CMAR model. It is a contractual ceiling on the total construction cost, agreed upon before full construction begins.

🔒 If the total cost exceeds the GMP (and there are no changes in scope), the CMAR is responsible for covering the difference.

If the final project cost is below the GMP, savings may be:

• Returned to the owner
• Split between owner and CMAR
• Retained by the CMAR (as per contract)

✅ Advantages of Using CMAR

1. Budget Certainty

GMP ensures that the owner won’t face cost overruns, providing peace of mind during construction.

2. Early Collaboration

The CMAR contributes valuable insight during design, reducing costly changes later on.

3. Faster Delivery

Construction can start on portions of the project before final design is completed, speeding up the timeline.

4. Improved Quality

With input from the CMAR, potential issues are addressed before construction, enhancing quality.

5. Transparent Cost Management

The CMAR typically uses open-book accounting, giving the owner visibility into actual costs and subcontractor pricing.

⚠️ Challenges of CMAR

❌ 1. Higher Upfront Costs

Preconstruction services are added expenses not typically found in traditional models.

❌ 2. Risk of Ambiguity in GMP

Setting the GMP too early, before full design clarity, can result in disputes about what is or isn’t included.

❌ 3. Potential Conflicts of Interest

As both advisor and builder, the CMAR may face situations where decisions benefit construction efficiency at the cost of design intent.

❌ 4. Greater Owner Involvement

The owner still manages two separate contracts—with the designer and the CMAR—requiring active participation.

📘 Legal and Contractual Aspects

A CMAR project hinges on clear, detailed contract documents. These contracts must address:

• GMP terms and inclusions
• Allowances and contingencies
• Change order processes
• Subcontractor procurement
• Dispute resolution
• Shared savings clauses

Commonly used standard forms include:

• AIA A133: Agreement with Construction Manager as Constructor
• AIA A201: General Conditions of the Contract

🧭 When to Use the CMAR Method

The Construction Manager at Risk model is best suited for:

• Large or complex projects with many variables
• Public-sector work where transparency is essential
• Projects with tight schedules that benefit from early contractor input
• Renovations or phased builds where design and construction must overlap
• Owners wanting budget control with some design authority retained

🎯 Best Practices for CMAR Projects

1. Engage CMAR Early
   Bringing the CM on board at the start maximizes their input on cost and constructability.
2. Establish a Clear Scope
   Before setting the GMP, ensure the design documents are detailed enough to avoid ambiguity.
3. Use Open-Book Accounting
   Transparency builds trust and helps avoid billing disputes.
4. Foster Communication
   Regular coordination meetings between the owner, designer, and CMAR ensure alignment.
5. Include Performance Incentives
   Contracts can reward early completion or savings below the GMP, motivating excellence.

📚 Conclusion

So, what is Construction Manager at Risk in construction? It’s a hybrid project delivery method where the CM is engaged early in design and agrees to deliver the construction work within a Guaranteed Maximum Price, taking on the financial risk for cost overruns.

The CMAR model fosters early collaboration, cost control, and faster delivery, making it a preferred choice for many public and private construction projects. While it requires detailed planning, proactive ownership, and contractual clarity, CMAR offers significant advantages in managing both risk and reward in modern construction environments.

❓ Frequently Asked Questions (FAQs)

Q1. What does Construction Manager at Risk mean?

A: It’s a project delivery method where a construction manager provides preconstruction services and then builds the project under a Guaranteed Maximum Price, assuming cost overrun risk.

Q2. What is the main benefit of CMAR?

A: CMAR offers cost certainty through a GMP, reduces change orders, and enables faster project delivery through early collaboration.

Q3. How is CMAR different from Design-Build?

A: In CMAR, the owner contracts separately with the designer and the construction manager. In Design-Build, both services are provided under a single contract, limiting the owner’s control over design decisions.

Q4. What happens if the project exceeds the GMP?

A: Unless caused by scope changes or unforeseen conditions, the CMAR is responsible for covering the cost overrun.

Q5. Is CMAR suitable for public projects?

A: Yes. It’s widely used in public sector projects such as schools, hospitals, and infrastructure due to its transparency and cost control benefits.

Q6. Can CMAR be used for small-scale projects?

A: While it’s ideal for large or complex builds, CMAR can be adapted for smaller projects, though it may not always be cost-effective.

Q7. What kind of contract is used in CMAR?

A: The owner signs separate contracts with the designer and the CMAR. AIA A133 and A201 are commonly used standardized agreements.