Construction Manager at Risk (CMAR) is a project delivery method that requires the Construction Manager to deliver a project within an estimated Guaranteed Maximum Price. This process creates a unique partnership between the project owner, the architect, and the CMAR as they must work together to complete the project within the specified budget.
At the beginning of the project that owner will hire an architect to begin work on the project design. The project owner then hires a CMAR. The architect and the CMAR will be under separate contracts, but they will work together during the project design.
The project owner and the CMAR next decide on when the Guaranteed Maximum Price (GMP) for the project should be presented. The required GMP presentation time is usually when the project design is at a certain point in its completion. It can be 50% complete, 70% complete, or any point that the project owner and CMAR decide on.
After the owner and the CMAR have reached a decision, the CMAR must estimate the project GMP. The GMP is meant to cover the total cost of construction. The CMAR must work with the architect of the project to determine what construction costs will be based on the architect’s completed portion of design. The CMAR must also estimate the cost of designs detailed after the GMP is presented to ensure that forthcoming construction requirements will not exceed the available budget decided upon in the GMP.
In addition to the GMP, the CMAR must estimate contingency funds. There are two contingency funds: owner managed and contractor managed. These funds are meant to cover the cost of certain details added to the project design after the GMP has been settled. The owner managed fund is allotted to cover scope changes decided upon by the project owner after the GMP is established. The contractor managed fund is set aside to cover the cost of construction of undefined portions of the project design completed after the GMP has been decided.
After GMP and funds are established, preconstruction services can begin. The purpose of the preconstruction services is to maximize quality and value while staying within the pre-determined price. The CMAR will continue to work with the architect, other contractors, and subcontractors to make recommendations and decisions regarding project materials in order ensure that the best possibly quality is obtained without exceeding the GMP.
After preconstruction, construction on the project can progress normally, with the CMAR ensuring that budgets are followed throughout. At the conclusion of a project, the GMP should be met as closely as possible. If the project went too far under budget then expected quality standards may not have been met, or more could have been accomplished on the project but was not. However, if the project exceeds the budget that can also indicate that the project quality and value standards were not met, as some quality might have to be sacrificed to keep the project from going further of the established budget.
Having an experienced CMAR can be the difference in a quality project and one that falls below owner expectations. Experienced CMAR contractors provide project review, accurate budget estimation, and logical scheduling for project completion. They also know how to maintain a solid line of communication between owner, architect, and themselves. Adequate communication results in far fewer requests for information and change orders. How the owner managed and contractor managed contingency funds are managed and used is also a significant part of ensuring that a project is completed smoothly, and within the GMP, and having an experienced CMAR can make a world of difference.