Anyone familiar with construction knows that the mix of planning, design, and the actual physical work on a job site can be hard to manage. When there are so many moving parts, organization and sticking to a plan of attack become crucial. That’s where project delivery methods come in. They help ensure that a given project is successful and provide structure to how planning, execution, and payment will be coordinated. In this post, we will talk about the Construction Manager at Risk (CMAR) method.
Construction Manager at Risk (CMAR)
In general, the Construction Manager at Risk Method is an agreement where the construction manager will “deliver” the project within a set guaranteed maximum price. Acting as an agent of the property owner, the construction manager manages the cost and construction of the project to stay below that maximum price. If the project exceeds the max price, the manager will be financially liable for the amount they go over.
This method divides the project into two processes: design and building. During the building phase, the construction manager supervises the building in the same way that a general contractor would.
Benefits to the Property Owner
Right out of the gate, one of the biggest benefits to property owners is that it provides a higher level of cost control from the very beginning of the project. Throughout the design process of the project, the construction manager provides the property owner with cost estimates with the goal of keeping those estimates in line with the established budget. If things don’t add up, then design changes are made to bring the cost in line with the outlined budget.
Secondly, the construction manager is an agent of the property owner. In other words, the construction manager’s responsibility is to control and manage the project in the best interest of the property owner. This is beneficial because, if successfully done, the property owner has constant eyes and ears on the project, which in turn helps to reduce dreaded delays and cost overruns. This also reduces the burden on the property owner to manage the project.
Finally, the owner’s financial risk is limited. As discussed in the prior section – a maximum guaranteed price is set, and an owner knows that the price is the maximum exposure they face if all goes well.
Benefits to the Construction Manager
For one, using the CMAR method, the construction manager has a ton of control, right from the start of the project. By being heavily involved with the owner’s decision making and with the design phase of the project, a construction manager at risk will be able to bridge together the design and build phases of the project. These two project phases can pretty easily find themselves at odds, so reducing that strain is a big win here.
Further, as long as the construction manager stays under the guaranteed maximum price, risk is reduced. Under the CMAR method, the owner and construction manager have already come to terms on an acceptable number. Fights about payment can be alleviated when the job stays on-budget.
As with any delivery method, technical and even human error still occur. Unexpected issues pop up, egos can flare, and best-laid plans may go to waste. When working on a large, complex project, though, using the construction manager at risk method can go a long way toward keeping the project in sync from top to bottom and managing risk responsibly.