What Is Construction Manager at Risk (CMAR)?
By: Pritam Tamang on June 26, 2020
In the traditional design-bid-build (DBB) project delivery method, a project owner
begins by hiring an architect to finalize the design and then invites bids from
contractors to oversee the actual construction. If the project overshoots its budget,
there is nothing much the owner can do except having to bring in additional
resources or shelving the project.
A newer delivery method, the construction manager at risk (CMAR), addresses this
challenge by introducing a ceiling called the guaranteed maximum price (GMP).
Overruns beyond this ceiling fall outside the project owner’s liability, barring change
orders.
This article will explain more about the CMAR delivery method.
Here’s what we’ll cover:
What is CMAR?
How is CMAR different?
When should you choose CMAR?
When should you avoid CMAR?
Conclusion and next steps
What is CMAR?
CMAR is a project delivery method wherein a project owner hires a general
contractor (individual/firm) to offer consultation on the feasibility and
constructibility of a project. Often, the project owner employs the same general
contractor to complete the actual construction.
In this method, the general contractor assumes two roles. First, they act as
consultants, offering advice to the owner and collaborating with the architect to
create a design that aligns with the owner’s budget and schedule. Second, they act
as legal contractors, assuming the risk of assembling a team of subcontractors to
complete the project as per the GMP contract.
Any budget overrun that is not approved in due change orders is the liability of the
contractor.
How is CMAR different?
CMAR is a relatively newer alternative to the more traditional and popular DBB
project delivery method. With CMAR, project owners can avoid the typical conflicts
in the DBB method, such as the contractor creating a significantly over-budget cost
estimate or pointing out design flaws late in the project lifecycle.
Design-Bid-Build CMAR
The contractor is hired only The contractor is hired before, or at around the
When is the
after the architect completes same time, the architect starts crafting the project
contractor hired?
the design. design.
How is the The contractor is hired primarily
The contractor is selected based on their
contractor based on the quote for
qualifications and experience.
selected? completing the project.
The contractor is responsible The contractor offers feedback on cost, time frame,
What is the role
only for the actual construction and constructibility of the design while also being
of the contractor?
activities. responsible for the actual construction.
When should you choose CMAR?
Here are some likely scenarios when this method is suitable:
Inadequate industry experience/expertise: Project owners might not always have the
experience/expertise of “design science” to work effectively with the architect and craft a well-
planned construction blueprint. In such cases, hiring a construction company that offers CMAR
makes sense as they have a team of qualified general contractors who are experts at
understanding construction drawings, design specifications, and their real-world interpretations.
External funding: In some scenarios, project owners might be acquiring funds from financing
groups who have complete control over the budget. The CMAR method works in this case as it
allows the project owner to present an upfront, project cost (GMP) to the financiers.
When should you avoid CMAR?
CMAR is not suitable for every type of project and scenario. Here are some cases
when it’s better to avoid this method:
Collaboration challenges: Unlike DBB, CMAR demands close-knit collaboration between the
project owner, architect, and contractor at the design conceptualization stage. However, small
project owners might not have the time or adequate staff to shoulder the additional administrative
responsibilities that such close collaboration necessitates.
Legal restrictions: If the project is publicly funded, the project owner can be bound by laws to
award the project to the lowest “responsible” bidder. In such cases, the CMAR method doesn’t
work because the contractor is selected based on their qualifications and experience and not on
their bid amount.
Conclusion & next steps
You save yourself from costly surprises by roping in a contractor early in the
process to get an upfront and immediate estimation of project costs.
However, the CMAR method demands cohesive collaboration between the three
parties: owner, contractor, and architect. As a project owner, you can
use construction management software that comes with built-in collaboration
features such as shared task dashboards and file sharing.
We can help find the right software. Just schedule a no-obligation, free
consultation with our construction software experts.
