Construction Manager at Risk

Construction Manager at Risk (CMAR) is a project delivery method in which the government hires a construction manager early in the design phase to provide constructability advice and cost estimating, and then that same firm executes construction for a Guaranteed Maximum Price (GMP), assuming financial risk for cost overruns above the guaranteed ceiling.

What is Construction Manager at Risk?

CMAR blends elements of design-bid-build and design-build. Like design-bid-build, the government maintains a separate contract with an architect/engineer for design. Like design-build, the construction manager is engaged early, before design is complete, to provide preconstruction services including cost estimating, schedule analysis, value engineering, and constructability review.

The CMAR relationship transitions in two phases. During preconstruction, the CMAR provides advice without construction liability. When design reaches a sufficient level of completion (typically 60-80%), the CMAR commits to a Guaranteed Maximum Price covering all construction costs within a defined scope. If actual costs exceed the GMP, the CMAR absorbs the overrun. If costs come in under the GMP, the government and CMAR typically share the savings per a pre-agreed split.

CMAR is less common in federal contracting than design-bid-build or design-build because FAR's sealed bidding preference for construction creates legal friction with the early-engagement, negotiated structure of CMAR. However, it is used by some federal agencies under their statutory authorities, particularly for complex facilities such as research laboratories, hospitals, and technical facilities where constructability input during design significantly reduces later cost growth.

State and local government construction programs use CMAR more frequently than the federal government, making it an important delivery method for contractors pursuing infrastructure and public works contracts below the federal level.

Why CMAR matters for government contractors

CMAR creates a collaborative pre-construction relationship that often gives the construction manager significant insight into the project, and a competitive advantage for winning the GMP phase. Firms with strong estimating, scheduling, and value engineering capabilities are best positioned to succeed in CMAR competitions.

Example

A state department of transportation awards a CMAR contract for a $180M bridge replacement. The CMAR firm provides constructability review and cost estimates during design, flagging a $12M potential overrun from the original scope. After redesign, the CMAR commits to a $172M GMP. Construction comes in at $168M; the $4M savings are shared 80/20 between the government and CMAR per the contract terms.

Frequently Asked Questions

How is a CMAR selected?

CMAR firms are typically selected through qualifications-based competition during the preconstruction phase, similar to Brooks Act A/E selection, since the GMP hasn't been established yet. Selection criteria focus on relevant experience, team qualifications, preconstruction services approach, and the firm's track record of delivering within GMP commitments.

What happens if the GMP cannot be agreed upon?

If the government and CMAR cannot reach agreement on a GMP, the government may terminate the CMAR arrangement and proceed to traditional competitive bidding for construction. This is a rare but real risk that procurement officials must account for when choosing CMAR as a delivery method.

Does CMAR transfer design liability to the construction manager?

No. Unlike design-build, in CMAR the architect/engineer retains design liability. The CMAR is liable for construction cost and schedule adherence to the GMP, but design errors that cause cost increases beyond the GMP are typically handled through owner-directed change orders that may adjust the GMP.

Is CMAR available for small businesses?

CMAR's complexity and the financial capacity required to commit to a GMP make it challenging for very small firms. However, small businesses can participate as subcontractors on CMAR projects, and some CMAR solicitations include small business subcontracting plan requirements.