What Is Construction Manager at Risk (CMAR)?

By: 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.

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
When is the contractor hired? The contractor is hired only after the architect completes the design. The contractor is hired before, or at around the same time, the architect starts crafting the project design.
How is the contractor selected? The contractor is hired primarily based on the quote for completing the project. The contractor is selected based on their qualifications and experience.
What is the role of the contractor? The contractor is responsible only for the actual construction activities. The contractor offers feedback on cost, time frame, and constructibility of the design while also being 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.

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