Cost overruns derail roughly 27% of construction projects, according to industry data, forcing owners to absorb unexpected expenses or reduce scope. CMAR construction changes this dynamic by shifting more financial risk to the construction professional managing the work.
CMAR construction (Construction Manager at Risk) is a delivery method where the owner hires a construction manager during design, and the CM later acts as the general contractor during construction. The CM commits to a Guaranteed Maximum Price (GMP) prior to bidding. The owner holds separate but overlapping contracts with the design team and with the CM/GC. Early CM involvement supports cost, schedule, and constructability decisions, while the GMP shifts much of the cost risk from the owner to the CM.
How Does The CMAR Process Work From Selection To Closeout?
The CMAR workflow follows a structured path that connects early design involvement to construction execution. It creates clear decision points, allowing owners to maintain control while construction managers provide expertise. Understanding each stage helps teams coordinate effectively and manage responsibilities throughout the project.
Construction Manager Selection and Early Engagement
Owners typically select a construction manager during the design phase, often based on qualifications rather than the lowest bid. The evaluation typically focuses on experience with similar project types, financial capacity, and demonstrated ability to provide preconstruction services. Some owners involve the CM in architect selection, creating a collaborative team from project inception.
The CM immediately begins providing design-phase services, including preliminary cost estimating and schedule input. The CM coordinates with architects and engineers to review constructability and identify potential issues before they become costly problems. This early involvement allows the CM to influence design decisions that affect both cost and buildability.
Preconstruction Services and Value Engineering
During preconstruction, the CM provides cost estimates at key design milestones. These estimates become more refined as design progresses, helping owners make informed decisions about scope and budget. Value engineering reviews examine design alternatives that can reduce costs or improve performance without compromising quality.
Constructability reviews assess how design elements will be built in the field. The CM identifies potential conflicts, sequencing issues, or material availability concerns. This process often results in design modifications that save time and money during construction while improving overall project quality.
Guaranteed Maximum Price Development
The CM develops a Guaranteed Maximum Price before construction bidding begins. This GMP includes all construction costs, the CM’s fee, and contingency allowances for reasonably inferred scope items. The contingency covers unforeseen conditions that are typical for the project type but not explicitly detailed in the design documents.
The GMP represents the maximum financial exposure for the owner, assuming no scope changes. If actual costs exceed the GMP due to CM performance or estimating errors, the construction manager absorbs the overrun. This arrangement transfers significant cost risk from the owner to the CM and provides budget certainty for project financing.
Open-Book Cost Transparency
CMAR projects typically use open-book accounting that provides full cost visibility to owners. All construction costs, subcontractor bids, material purchases, and change orders are documented and shared with the owner. This transparency builds trust and allows owners to verify that costs are reasonable and necessary.
Open-book practices extend to the CM’s fee structure, showing how management costs, overhead, and profit are calculated. Owners can track actual performance against the GMP throughout construction, creating accountability for both cost control and quality delivery.
Subcontractor Prequalification and Competitive Bidding
Subcontractors undergo prequalification to ensure they meet project requirements for experience, financial capacity, and safety performance. Guidance on OSHA heat-stress compliance may also be considered during vetting. This process happens before bid solicitation and helps prevent problems with unqualified contractors. Prequalification criteria are typically developed jointly by the owner and CM.
Competitive bidding among prequalified subcontractors provides market pricing while maintaining quality standards. The owner often participates in bid evaluation and subcontractor selection, ensuring transparency in the process. This approach balances cost competition with performance reliability.
Construction Phase Coordination
The CM transitions to the general contractor role during construction, coordinating all work activities and managing the project schedule. Daily coordination includes subcontractor supervision, material delivery scheduling, and quality control inspections. The CM maintains cost tracking against the GMP and provides regular progress reports to the owner.
Schedule management becomes critical as the CM must coordinate multiple subcontractors and material deliveries. The CM monitors critical path activities and adjusts sequencing as needed to maintain project milestones. Weather delays, permit issues, or design clarifications are managed through established change order procedures.
Closeout and Project Handover
Project closeout begins with punch list development and completion of remaining work items. The CM coordinates final inspections, system commissioning, and regulatory approvals needed for occupancy. All warranty documentation and operating manuals are compiled and transferred to the owner.
Final cost reconciliation compares actual expenses to the GMP and resolves any remaining financial items. The CM provides comprehensive project documentation, including as-built drawings, maintenance schedules, and warranty contacts. This thorough handover ensures owners can operate and maintain their facilities effectively from day one.
What Benefits Do Owners And CMs Gain With CMAR?
CMAR delivers distinct advantages for both project owners and construction managers. These benefits stem from the collaborative approach and risk-sharing structure that define the delivery method.
Owner Benefits Through Risk Transfer And Cost Control
The Guaranteed Maximum Price (GMP) serves as the cornerstone of owner protection in CMAR projects. This contractual ceiling shields owners from cost overruns, transferring financial risk to the construction manager (CM). When unforeseen conditions arise or material costs spike, the CM absorbs these impacts rather than passing them to the owner.
Cost certainty extends beyond the GMP itself. Early CM involvement during design allows for more accurate budget forecasts and realistic pricing. We work with owners to identify potential cost drivers before they become change orders, creating budget stability that supports better project planning and financing decisions.
The open-book cost approach further strengthens owner confidence. Unlike traditional bidding, where pricing remains opaque, CMAR provides transparency into labor costs, material expenses, and subcontractor rates. This visibility enables owners to make informed decisions about scope adjustments and value engineering opportunities.
Enhanced Project Outcomes Through Early Collaboration
Value engineering becomes more effective when the CM participates in design management and design development. We can identify constructability issues early, when they can still be addressed through design changes rather than field modifications. This input often reveals cost-saving alternatives that maintain project quality while reducing overall expenses.
Schedule reliability improves significantly through coordinated planning. CMs bring field experience to the design process, helping identify sequencing challenges and long-lead items before they affect the critical path. This foresight reduces delays and supports more predictable project delivery.
Quality outcomes benefit from the integrated approach. When we understand design intent from the beginning, we can better coordinate subcontractors and ensure construction methods align with project goals. The collaborative relationship between owner, designer, and CM creates accountability that drives performance across all project phases.
Construction Manager Advantages In Design Influence And Bidding
Early design involvement gives CMs substantial influence over project direction. We can guide material selections, construction methods, and sequencing decisions that impact both cost and schedule. This input creates projects that are more efficient to build and operate.
The preconstruction phase and preconstruction services provide deep project knowledge that translates to competitive advantages. CMs who support design development understand project complexities, site preparation, site conditions, and owner priorities better than competitors who only see final bid documents. This insight enables more accurate pricing and stronger technical proposals.
These bidding advantages often lead to contract awards for the preconstruction CM. While owners may still run competitive processes for the construction phase, the CM involved in design typically has the best understanding of project requirements and can propose the most realistic schedule and budget. This knowledge advantage frequently results in contract continuation from design through construction.
However, these benefits come with increased responsibility. The GMP commitment means CMs must deliver within agreed parameters regardless of market conditions or unexpected challenges. Success requires thorough preconstruction planning, accurate estimating, and strong project controls throughout construction. We balance influence and opportunity with accountability for project outcomes.
What Risks And Challenges Should Teams Plan For In CMAR?
CMAR projects introduce specific challenges that can derail schedules and budgets when teams fail to address them proactively. We see these risks arise repeatedly across projects, often stemming from misaligned expectations or incomplete planning during the early phases.
Owner Coordination Complexities
Owners face significant coordination demands because design and construction teams communicate primarily through the CM, not directly with each other. This creates bottlenecks when decisions require input from multiple parties. We coordinate these interfaces daily, but owners must stay engaged to prevent delays.
The CM serves as the central hub for project communication, and decision-making can slow when approval processes are unclear. Owners need established protocols for reviewing design changes, approving contingency spending, and managing scope adjustments. Without these frameworks, projects stall while teams wait for direction.
GMP Pressure And Quality Control Risks
The guaranteed maximum price (GMP) creates financial pressure that can compromise quality if not managed properly. CMs working within tight margins may select lower-cost materials or subcontractors to protect their financial position. This pressure intensifies when unforeseen conditions or scope gaps emerge after the GMP is set.
Quality control is critical because the CM must balance delivering within budget with maintaining project standards. We implement rigorous inspection protocols and material approval processes to prevent corner-cutting. Regular quality audits and third-party testing help identify issues before they escalate into major problems.
Projects suffer when quality controls are inadequate or inconsistently applied. Clear quality standards, documented inspection procedures, and independent oversight help maintain project integrity under GMP constraints.
CM Vetting And Performance Risks
Selecting an inexperienced or inadequately resourced CM creates cascading problems throughout the project. We see projects where underqualified CMs underestimate costs, miss critical design issues, or lack the subcontractor relationships needed for competitive bidding. These failures often emerge after the GMP is established, creating disputes over scope and cost responsibility.
Thorough CM vetting involves reviewing past project performance, financial capacity, and team qualifications. Owners should verify the CM’s experience with similar project types, their relationship with key subcontractors, and their track record for delivering projects within budget. References from recent projects provide insight into communication skills and problem-solving capabilities.
A weak CM also creates reputational risk for owners, particularly on high-visibility projects where delays or cost overruns become public issues.
Scope Changes And Change Order Management
The GMP is based on project documents available at the time of the agreement, making scope changes likely as designs progress. Major modifications require change orders that adjust both scope and price, creating potential disputes over what was “reasonably inferable” from the original documents.
Document completeness directly affects the frequency and size of change orders. Incomplete drawings or specifications force CMs to make assumptions that may not align with owner expectations. We work to identify scope gaps during preconstruction, but some changes are unavoidable as designs develop.
Clear change order procedures help manage these adjustments. Teams need established processes for documenting changes, approving cost impacts, and updating the GMP. Contingency funds provide a buffer for minor changes, but major scope additions require formal change orders to maintain project transparency.
Change order disputes often center on whether work was included in the original scope or represents a genuine addition. Detailed documentation of assumptions and exclusions during GMP development helps resolve these disagreements.
When Is CMAR The Right Fit Versus DBB Or DB?
Project complexity shapes delivery method selection. We evaluate CMAR alongside design-bid-build and design-build based on project characteristics, owner needs, and market conditions. Each method fits specific scenarios where its structure provides the most value.
Project Characteristics Favoring CMAR
Large-scale projects with evolving designs benefit from CMAR’s collaborative structure. When owners need ongoing input during design development, early involvement by the construction manager provides constructability reviews and cost guidance throughout. Complex projects that require extensive stakeholder coordination gain from having a professional manager representing owner interests across all phases.
Schedule constraints make CMAR particularly effective when completion dates cannot slip. The method allows construction to begin on completed design portions while other areas remain in development. This phased approach reduces overall project duration compared with waiting for the full design completion required under design-bid-build.
Projects requiring extensive subcontractor coordination benefit from CMAR’s prequalification process. Rather than awarding to the lowest bidder regardless of qualifications, we can evaluate subcontractors based on experience, capacity, and past performance. This vetting reduces construction risk and improves quality outcomes.
When Other Methods Make More Sense
Simple projects with straightforward designs often work better under design-bid-build. When collaboration adds little value and owner involvement can remain minimal, the traditional sequential approach provides cost certainty through competitive bidding. Public projects that require lowest-bid selection may mandate design-bid-build regardless of other considerations.
Projects where speed takes priority over owner control often suit design-build delivery. When owners can define requirements clearly upfront and accept reduced design oversight, design-build’s unified structure delivers faster completion. A single contract eliminates coordination between separate design and construction teams.
CMAR vs. Design-Build
CMAR maintains separate contracts with design and construction teams, giving owners direct relationships with both parties. This structure provides more design control but requires more coordination. Design-build combines both functions under one contract, streamlining communication but reducing owner oversight of design decisions.
Owner coordination requirements differ significantly between methods. CMAR owners participate actively in design reviews, cost discussions, and construction decisions through separate contracts. Design-build owners work primarily with the unified team, receiving less visibility into individual design and construction processes.
Risk allocation varies between approaches. CMAR transfers construction cost risk through a guaranteed maximum price (GMP), while keeping design risk with the architect under a separate contract. Design-build consolidates both design and construction risk with the unified team, potentially reducing owner exposure but limiting control over individual components.
CMAR vs. Design-Bid-Build
Early contractor input distinguishes CMAR from traditional design-bid-build sequencing. Instead of waiting for complete design before selecting a contractor, CMAR brings construction expertise into the design phase. This timing helps prevent costly design revisions during construction and improves constructability from the start.
Subcontractor prequalification replaces lowest-bid selection in CMAR projects. We evaluate trade contractors based on qualifications, experience, and capacity rather than price alone. This approach reduces performance risks but may increase initial costs compared to strict low-bid selection.
The GMP provides cost certainty earlier than design-bid-build’s post-design bidding. Owners know maximum project costs before construction begins, enabling better financial planning. Design-bid-build delivers final pricing only after complete design, potentially requiring design changes if bids exceed budgets.
Project duration typically favors CMAR when fast-tracking is possible. Construction can begin on foundation and structural work while building systems design continues. Design-bid-build’s sequential phases prevent construction until all design work is complete, extending overall project timelines.
Conclusion And Next Steps
CMAR construction blends early contractor input with cost control through a guaranteed maximum price and collaborative planning. This delivery method creates a framework where owners, architects, and construction managers collaborate from design inception through project completion. The structured approach offers developers and property owners greater budget predictability while preserving design flexibility in the early phases.
To implement CMAR effectively, owners should define the scope early and engage the construction manager during design development rather than waiting until documents are complete. Clear contracts that establish roles and responsibilities prevent confusion during both preconstruction and construction phases. Open-book cost practices create transparency, and prequalified subcontractors ensure quality and competitive pricing. We recommend establishing a documented change-order process before construction begins, including clear approval protocols and contingency management procedures. When possible, teams should aim to have construction documents substantially complete before finalizing the guaranteed maximum price and incorporate appropriate contingencies for reasonably anticipated conditions. These practices help balance the benefits of collaboration with cost certainty and quality control throughout project delivery.
Ready to explore how CMAR construction can benefit your next development project? Contact EB3 Construction to discuss your project’s specific requirements and delivery approach.
