Construction Manager – At – Risk

This method has traditionally been used in the private marketplace and is now becoming more accepted in the public sector as well. In this scenario, the owner hires an Architect, perhaps using the same methods as the Design – Bid – Build method described above, or he may be even be more particular about who he would like to have design his project and hire someone directly. The Owner and the Architect get together and discuss criteria that they are looking for in a Construction-Manager-At-Risk and may choose to openly advertise for qualifications of Construction Managers (CM’s), develop a short list, interview, and select one, or the Owner or Architect may already have a favorite CM that they want to work with and may choose to invite them to participate directly.

With this project delivery method, a “team” is set up very early in the design process, which includes the Owner, the Architect (and his engineering consultants), and the Construction Manager. The traditional design phases of concept, schematic, design development, and construction documents are followed however, the CM has the responsibility of developing all estimates, not the Architect. The CM also has the added responsibility of offering input to the Owner and Architect for alternatives to achieve the design intent and to maintain the construction budget. All team members participate in the decision making process as the design evolves and all parties are expected to communicate their ideas, concerns, etc. openly and freely to the betterment of the project.

During the final pricing at the construction documents stage, the CM is responsible for soliciting multiple/competitive quotes from suppliers, venders, and subcontractors and usually selects companies that he has pre-qualified to provide the necessary scopes of work, rather than simply opening it up to all. This helps to assure that the entire construction team will work well together. All of the prices are tabulated and the CM makes recommendations on which subs are best qualified to the other members of the project team.

Once the construction team is assembled and a final price put together, the construction process begins. Usually with this project delivery, there is less need for the architect’s involvement during the construction as the design intent, quality, and overall project goals have been discussed and understood throughout the design phase. Generally, the Owner uses the Architect only on an as-needed basis.

The Owner has a contract with the Architect for his services and the services of his consultants. The Owner has a two-part contract with the CM: 1) for pre-construction services and 2) for the actual construction.

Pros to this method of project delivery:

• The design process is generally shorter. The design is generally more directed as all parties are offering input, and the level of detail required to document the design intent is generally less because the CM is participating during the design evolution. Further, the CM has the responsibly for soliciting competitive pricing by assembling and administering a “bidding” process.

• The Architect’s (including consultants) portion of the project budget is less costly than the Design – Bid – Build method because of the reduced level of services and responsibilities required.

• The team members “buy-in” to the decisions as they are made.

• It is a non-adversarial arrangement

• The design intent is communicated through the documents and by the CM’s direct involvement with subcontractors, suppliers and venders. While they are the basis of soliciting pricing, the CM plays a larger role in the selection of who gets invited to quote and whom he feels are the best “team players.”

• In many instances, the construction cost is established, a construction contract put in place, and the construction started, prior to the completion of all of the construction documents. This speeds up the project delivery timeframe.

• The party who is directly responsible for the construction portion of the project establishes the expected cost for construction early in the process. This generally provides reassurance to the entire project team that one of the major project goals is being monitored and met as the design evolves.

• Usually the form of contract for the construction phase is based on the costs of the work plus a negotiated flat fee. Financial incentives for both the owner and/or the CM are also usually discussed and negotiated and might include considerations for early completion and actual costs vs. estimated costs. These incentives are usually structured in such a way to encourage the CM to continue to find the best value for the Owner during the construction phase.

• Because the CM has participated during the design phases, usually there are far less Change Orders due to the Architect’s (and his consultants) work. The CM has a clearer understanding of the project goals and objectives and a level of responsibility to assure that they are met.

Cons to this method of project delivery:

• The Owner needs to decide on the CM early on in the process based on criteria he and the Architect establish including experience, reputation, references, etc.

• The Owner and the Architect need to be in full agreement that this project delivery method is appropriate for the project type, size, and overall project goals.

• Certain government agencies will not allow this type of project delivery.

• This method may exclude some suppliers, subcontractor, and venders who might otherwise provide quotes, based on the CM’s selection process.

General Contractor - Construction Manager - Design Builder

3025 North Belfast Avenue, PO Box 27, Augusta, Maine 04332-0027

(207) 621-8505        Fax: (207) 621-8508