Construction Management (CM) at-risk is a delivery method which entails a commitment by the construction manager to deliver the project within a Guaranteed Maximum Price (GMP). The construction manager acts as a consultant to the owner in the development and design phases (preconstruction services), and as a general contractor during construction. When a construction manager is bound to a GMP, the fundamental character of the relationship is changed. In addition to acting in the owner’s best interest, the construction manager must control construction costs to stay within the GMP.
CM at-risk is a global term referring to the business relationship of a construction contractor, owner and architect/engineer. Typically, a CM at-risk arrangement eliminates a “low-bid” construction project. A GMP agreement is a typical part of the CM-and-owner agreement (comparable to a “low-bid” contract), but with adjustments in responsibility for the CM. The advantage of a CM at-risk arrangement is budget management. Before a project’s design is completed, the CM is involved with estimating the cost of constructing a project based on the goals of the designer and owner including the project scope. In balancing the costs, schedule, quality and scope of the project, the design may be modified instead of redesigned; if the owner decides to expand the project, adjustments can be made before pricing. To manage the budget before design is complete and construction crews mobilize, the CM conducts site management and purchases major items to efficiently manage time and cost.
The construction manager provides a comprehensive management of every stage of the project, beginning with the original concept and project definition, yields the greatest benefit to owners. Construction Management is a fee-based service in which the CM is responsible exclusively to the owner, acting in the owner’s interest at every stage of the project. The construction manager offers impartial advice on matters such as:
- Optimum use of available funds
- Control of the scope of work
- Project scheduling
- Optimum use of design and construction firms’ skills and talents
- Avoidance of delays, changes and disputes
- Enhancing project design and construction quality
- Optimum flexibility in contracting and procurement
- Cash flow management
The Construction Management approach provides an incentive to the CM to act in the owner’s best interest, as well as to efficiently manage construction costs, considering they would be liable for any amount in excess of the GMP. This method is best for large projects, both new construction and renovations that are not easily defined, have a possibility of changing in scope, or have strict schedule deadlines. The construction management approach is an efficient method for projects containing technical complexity, multi-trade coordination, or multiple phases.
Pak Pacific Construction Professionals has completed numerous Construction Management projects and would love to discuss this delivery method for your project.