There are many different delivery methods in construction. Construction manager at risk delivery method can be an effective and worthwhile delivery method depending on the project. Roughly $15 billion is spent each year on rework which causes projects to go over budget and be inefficient. CM at risk labor delivery might be a way to help construction become more efficient.
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What is a Construction Manager?
Construction managers are hired to manage construction projects. Simple, right? However, what goes into managing a construction project can be complicated. Construction managers are either owner’s advocate or general contracting advocates, working to fulfill the project specifications. They set schedules, monitor finances, and project completion, and ensure the project is running smoothly. Construction managers have to ensure that the site is free of safety hazards, and should encourage communication among all stakeholders. A construction manager’s responsibilities are vast, and depending on the state of a project, could be stressful.
Construction Manager Responsibilities
Construction Managers are responsible for:
- Preconstruction Service – often construction managers will aid in the design phase development and approval, they also work with preconstruction phases. They will also estimate the project to provide a maximum price for the owner, they will solicit bids, and schedule to start.
- Project Management – During the construction process, the construction manager will manage the project for the project owner, ensuring that the project stays on budget and schedule.
- Safety and Quality Management – the construction manager, will ensure that the site is safe for everyone working it. And they also ensure that the site is built to code. This way the building can be used.
What is Construction Manager At Risk Delivery?
There are many different ways to realize a project in construction. One of the more common methods is Design-Bid-Build; however, construction manager at risk can be a reasonable alternative depending on the project. With the construction manager at risk (CMAR) delivery, the construction manager takes responsibility for the project, instead of a general contractor or other parties. These construction managers often work for a firm or another company and are hired by the owner to oversee the project. They work as a consultant for the owner.
Once they’ve been contracted by the owner, they help with all value engineering, as well as construction cost estimating and check constructibility. After they estimate they will give their Guaranteed Maximum Price (GMP). The GMP is a guaranteed number they’ll stay below during the project. The construction manager at risk solicits bids under that number to ensure they’ll stay on budget. The construction manager must communicate timelines and respond to Requests for Information, Change Orders, and Submittals to stay on top of the project. If a construction manager didn’t check to see how constructible a project is then they are likely to go over the budget.
Benefits of Construction Manager at Risk
Construction manager at risk delivery method can be extremely beneficial for owners. For example:
- Construction managers are hired at the start of the project before architects and engineers, and estimate the project every step of the way.
- Since the owner employed them, they act as the owner’s advocate and keep their best interests in mind at all times.
- They solicit and determine bids, so the owner doesn’t have to.
- The GMP protects the owner, it’s a guaranteed MAXIMUM price, with contingencies and allowances built into the contract. That way the owner isn’t overpaying for the project and the construction manager stays within budget.
- The construction manager doesn’t have to accept the lowest bid. Especially, if they think it’s too low or the work won’t be done correctly. They can accept the best person for the job if they fit in the budget and do great work.
These benefit of construction manager at risk delivery method are great reasons for owners to reconsider how they proceed with projects. It does shift much of the risk from the owner to the construction manager and can be a good way for owners to protect themselves.
Differences between Construction Manager at Risk and Other Methods
Construction Manager at Risk is different from other project delivery methods, and each has different benefits. With Design-Bid-Build, the owner contracts an architect and a general contractor, and they contract down for different pieces of the project. Design-Bid-Build tends to be the most expensive since there isn’t enough oversight and input to ensure the project is constructible. Design-Build, the owner hires a general contractor that employs the architect and subcontractors, but the owner is still very much at risk. Integrated Labor Delivery is a newer labor delivery method, and it ensures that everyone is a stakeholder in the project. Including designers, general contractors, owners, and subcontractors in the early stages of a project is beneficial. Since they can improve designs on the front end and reduce rework on the back end.
Each project delivery method has benefits and drawbacks. As a project owner, it depends on the project, preferred process, and goals for the organization.