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Contracts & Legalaka: CMARaka: CM at Riskaka: CMR

Construction Manager at Risk

In Plain English

A delivery method where the construction manager is hired early to assist with design and then commits to a maximum price for construction.

Definition

Construction manager at risk (CMAR) is a project delivery method in which the construction manager is selected early, typically during design, and assumes the financial risk of delivering the project within a guaranteed maximum price. The CMAR provides preconstruction services during design and manages construction for a fee. This approach combines the benefits of early contractor involvement with a price commitment.

Why It Matters in Bidding

CMAR changes the competitive landscape because price is committed through a guaranteed maximum price negotiated during design rather than a single hard bid. Estimators value early involvement for budgeting, constructibility input, and phased subcontractor buyout, while the GMP shifts overrun risk above the cap to the CM, making accurate preconstruction estimating and contingency management essential.

Example

Selected as construction manager at risk on a campus building, the firm produces successive design-phase estimates, then converts the documents into a guaranteed maximum price with a defined contingency before construction begins.

Related Terms

Guaranteed Maximum PriceDesign-Bid-BuildProject Delivery MethodGeneral Contractor

Frequently Asked Questions

The CM develops the GMP from the design documents available at conversion, typically including direct cost of work, subcontractor buyout, general conditions, fee, and a CM contingency. It is negotiated with the owner and often includes qualifications and allowances for incomplete design, with savings below the cap frequently shared per the contract.
Costs above the guaranteed maximum price are generally the CM's responsibility unless driven by owner-approved scope changes or qualified exclusions. This caps the owner's exposure and motivates the CM to manage buyout and the contingency carefully. Disputes often turn on whether an overrun stems from a true scope change or estimating shortfall.
Design-bid-build relies on a single competitive bid against complete documents. CMAR engages the estimator during design to produce progressive budgets, advise on constructibility and value engineering, and then commit a GMP from often incomplete drawings. That requires careful assumptions, allowances, and contingency rather than a one-time takeoff of finished plans.

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