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Construction Management At-risk

Construction management at -risk is a construction method that has gained significant support over the past several decades. Construction management at-risk calls for a greater role in the preconstruction process for the general contractor when compared to the classic design/bid/build approach.

Commonly referred to as CM at-risk, the construction manager at-risk method includes the contractor during the pre-construction process, as opposed to simply being handed the design plans from the architect once they are hired to build the project. Construction management at-risk does not require the winning bid to be the low bid; instead, the architect and property owner have the option of developing a more extensive vetting process to determine the winner of the project.

In the construction manager at-risk method, the contractor offers a guaranteed maximum price (GMP) to the client. The guaranteed maximum price is a statement made by the contractor that they will be able to complete the project successfully for this total. But the GMP is not simply for construction work; in the construction manager at-risk method, the contractor also serves as the owner's representative during the design and preconstruction process. The GMP includes the cost for those services as well.

With the construction manager at-risk method, the contractor plays a role in the overall cost estimates along with the architect and owner. The contractor can then suggest adjustments to the plan to remain within the GMP, or the owner can decide to spend more money on the project than had been originally anticipated. Once the budget for the job is set, the contractor hires the needed staff and employees and purchases needed equipment and materials.

Failure to keep adhere to the GMP can have tremendous negative consequences for the contractor. If the contractor fails to manage costs and exceeds the GMP, they can be contractually obligated to complete the project, no matter the cost, using their own funds. If they fail to do so, they can be found to be liable in civil court. This is major part of the reason why the construction manager is considered "at-risk" with this delivery method.

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