The CMAR delivery method continues to gain traction in construction

As construction firms look for smarter ways to win work, manage risk, and improve project outcomes, the Construction Manager at Risk, or CMAR, delivery method is gaining renewed attention. Unlike more traditional approaches, CMAR brings the contractor into the process earlier, creating opportunities to influence budgeting, scheduling, constructability, and coordination before construction begins. That early involvement can create real advantages for owners and contractors alike, especially on complex projects where planning and cost control matter from day one.

At the same time, CMAR is not simply an opportunity for greater influence. It also comes with greater responsibility. Because the contractor typically commits to delivering the project under a guaranteed maximum price, success depends on accurate estimating, disciplined cost control, strong preconstruction involvement, and careful management of changing job conditions. In the article below, we break down why CMAR continues to gain traction, where it can create value for construction companies, and what firms should weigh before taking on the added risk that comes with a larger seat at the table.

For many small and midsize construction companies, a diversified mix of project delivery methods can serve as a “secret sauce” for business success. One approach that has been around for decades but is drawing increased attention is Construction Manager at Risk (CMAR). It essentially brings the contractor into the building process earlier than traditional methods do, potentially offering more input into project planning and execution. However, with added involvement comes greater responsibility and risk.

Work starts early

Sometimes referred to as Construction Manager as Constructor, CMAR engages the contractor early in the project. It also typically makes the construction company responsible for delivering the job under a guaranteed maximum price (GMP). Generally, if costs exceed the GMP for reasons not covered by approved changes or other contract adjustments, the contractor bears that risk. This approach places additional pressure on job costing accuracy, cost control and cash flow planning throughout the project life cycle.

In keeping with its name, CMAR establishes the contractor as the construction manager during the design and planning phases. This involves working with the project owner and designer to develop the budget and schedule. The construction business also reviews building plans, prepares initial schedules, advises on materials availability and estimates costs as the design takes shape. During construction, it transitions to general contractor. Because financial performance is closely tied to early estimates, aligning preconstruction budgets with project accounting is critical.

Not quite the same

CMAR is similar to the design-build delivery method, with one big difference: The contractor doesn’t assume the design obligation and then subcontract it out to a consultant. Instead, the project owner offers two contracts — a design contract with an architect and a CMAR contract with the construction company.

During the CMAR preconstruction phase, the contractor typically provides advisory and estimating services while the design is still being developed before assuming full construction risk under the GMP. After the contractor submits a GMP proposal and the owner accepts it, those terms are added as an amendment to the CMAR agreement, making the contractor responsible for delivering the project.

Pluses and minuses

Your construction business may benefit from signing on to a CMAR contract in various ways. For starters, the GMP can provide greater pricing clarity at the outset of a project. Second, early involvement allows you to provide design input and ensure the job is feasible, reducing the risk of delays and disputes. Third, you may become the owner’s primary point of contact for construction-phase coordination. This can help streamline communication and cultivate a positive business relationship.

Naturally, there are risks. As mentioned, your business is on the hook for costs beyond the GMP. So, it’s critical to estimate costs accurately and watch for unanticipated events that could increase expenses. Common pressure points include labor cost escalation, materials price volatility, supply chain disruptions and change order disputes — all of which can erode margins if not proactively managed.

Also, sometimes the other parties to a CMAR contract bring in the contractor late, undermining the construction company’s ability to weigh in on the design. To reduce this risk, try to negotiate involvement as early as possible and clarify in the contract when you’ll begin providing preconstruction input and reviewing design decisions.

In the driver’s seat

CMAR can offer meaningful advantages to construction businesses prepared to take a more active role in planning, coordinating and controlling projects. But the allure of a GMP must be weighed carefully against the financial exposure that comes with sitting in the driver’s seat. We’d be happy to help you evaluate whether this delivery method would make financial and operational sense for your construction company if the opportunity comes along.

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