In today’s fast-paced construction industry, developers face increasing pressure to deliver large-scale projects on time, within budget, and without compromising any item that the scope statement mandates. Owners have high expectations, seeking cost control and streamlined processes without compromising quality. This is where the Construction Manager at Risk (CMAR) method becomes essential. CMAR provides an effective project delivery model that allows developers to mitigate risk, improve collaboration, and meet stringent financial and timeline goals. By involving a construction manager from the onset, owners gain a partner who ensures the project runs smoothly from design to completion, safeguarding their investment.
One of the primary advantages of CMAR is that it allows for early collaboration between the construction manager, designers, and the owner. By being involved in the design phase, the construction manager can provide valuable input regarding feasibility, design coordination, cost estimates, schedule risk management, and construction techniques. This collaboration ensures the design aligns with the project’s budget and schedule, reducing the likelihood of costly changes during construction. Early involvement also allows the construction manager to preemptively address potential challenges and constraints enhancing project efficiency and minimizing delays.
CMAR can be applied in two ways: GMP Contractual Agreement, or Cost-Plus-Fee Agreement depending on owner’s preference.
Establishing a Guaranteed Maximum Price (GMP) reduces financial risk for the owner. Once the Construction Manager(CM) evaluates the project scope after the Construction Documents(CDs) are approved %100 by the owner, the CM starts collecting bids from subcontractors for each work package. This contract ensures that any cost overruns beyond the GMP become the construction manager’s responsibility, not the owner’s. For developers managing large-scale projects, this financial certainty allows for better budget planning and risk management, providing peace of mind throughout the project lifecycle. However, when CM starts the tender process before %100 CDs, a major change in drawings at the Design Development phase can have a huge impact on already submitted bids based on Preliminary Design. To avoid this, CM should start the Bidding Process after %100 CDs are published where the scope is almost clear and solid.
The Cost-Plus-Fee is another project delivery method in which the construction manager (CM) is compensated for the actual construction costs along with an agreed-upon fee, which is typically a percentage of the total project cost or a predetermined fixed amount. In this arrangement, the owner reimburses the CM for all expenses incurred during the construction, including labor, materials, equipment, and subcontractor services, in addition to paying the CM's fee. This gives the CM a quite comfortable buffer time at the Pre-Construction phase and provides earlier and more effective involvement of the CM.
In a Cost-Plus-Fee contract, Construction kicks off under CM’s oversight. When the design, budget, and schedule are set, construction commences under the supervision of the Construction Manager. During the Construction phase, CM constantly monitors the work progress and implements his/her hands-on experience to ensure compliance with the construction documents, schedules, and budget. Throughout the project, CM provides an open-book accounting system. This means that the owner has full visibility into the actual construction costs as they are incurred. The CM must document and report all expenses, giving the owner transparency into every dollar spent, and ensuring the baseline budget does not exceed the anticipated costs. This transparency ensures trust between the owner and CM, as the owner can review invoices, receipts, and timecards for verification.
CMAR also improves project speed and efficiency. By involving the construction manager early in the process, they can begin soliciting the project management office during the design phase, accelerating the transition to construction. Additionally, the construction manager acts as a consultant, helping the owner navigate complex decisions, keeping the project on track, and ensuring deadlines are met. This proactive involvement often shortens project timelines, which is crucial for megaprojects where delays can result in significant financial losses.
In conclusion, while the CMAR model offers distinct advantages, its success relies heavily on strong leadership and the proper training of staff. Construction managers must have the expertise to balance design and budget concerns while effectively coordinating with teams. Digital project management tools are vital in tracking progress and monitoring key project metrics. With skilled management and a keen focus on communication, the CMAR model can help developers meet the high expectations of modern megaprojects, delivering quality results within budget and on time.
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