Construction manager at risk, commonly abbreviated CM-at-risk or CMAR, is a project delivery method that positions the construction manager as both the owner’s professional advisor during preconstruction and the party responsible for delivering the project during construction. Unlike a traditional owner’s rep who represents the owner without holding construction contracts, the CM-at-risk assumes the contractor’s financial risk on the construction phase, typically through a guaranteed maximum price (GMP) commitment. Unlike a traditional general contractor who is engaged after the design is complete, the CM-at-risk is involved from early design, bringing construction expertise to the project before the design decisions that drive cost are finalized.
How CM-at-Risk Differs From Traditional Project Delivery
To understand CM-at-risk, it helps to understand the problem it was designed to solve. In traditional design-bid-build project delivery, the owner hires an architect to complete the design, then competitively bids the completed design to general contractors, then awards a contract to the lowest responsive bidder. This sequence separates design from construction input, the contractor who will build the project has no involvement in the design decisions that determine what the project costs to build.
The separation produces predictable problems: designs that are difficult or expensive to construct, bids that come in over budget because the design didn’t reflect construction market realities, and value engineering negotiations after bid opening that consume time and goodwill. The owner ends up with a project that is more expensive than anticipated, a compressed timeline due to the VE process, and a GC who is building a modified version of a design they had no input on.
CM-at-risk resolves this by bringing the construction manager into the project during design, when input on constructability, phasing, material selection, and construction sequencing can actually improve the design rather than react to it. The CM-at-risk provides preconstruction services that help shape the design toward a project that can be built efficiently and within budget, then transitions to the construction phase under a GMP once the design is sufficiently complete.
The GMP: What It Means and What It Doesn’t Cover
The guaranteed maximum price is the CM-at-risk’s commitment that the project will be built for no more than the specified amount. Costs that come in above the GMP are the CM-at-risk’s financial responsibility, they cannot be passed to the owner as change orders unless they arise from owner-directed scope changes, errors or omissions in the owner-furnished design documents, or unforeseen conditions that are outside the scope of the GMP exclusions.
The GMP is typically established when the design is 50% to 75% complete, sufficiently detailed to support accurate cost estimating but not so complete that the CM-at-risk’s preconstruction input is no longer useful. The GMP includes the CM-at-risk’s construction cost estimate, the CM’s fee (typically 3% to 6% of construction cost), and a contingency that the CM controls for management of construction-phase cost variances within the GMP.
What the GMP does not cover: owner-directed scope additions, design changes after the GMP is established, unforeseen site conditions that meet the contract’s definition of differing site conditions, and certain regulatory requirements that arise after the GMP is set. The GMP exclusions require careful review, a GMP that has extensive exclusions provides less cost certainty than the headline number suggests.
When CM-at-Risk Is the Right Delivery Method
CM-at-risk is most valuable in specific project contexts:
Complex projects with long design timelines. Projects where the design will take 18 to 24 months before construction can begin, high-rise multifamily, complex mixed-use, institutional buildings, benefit from construction input throughout the design process. The CM-at-risk’s preconstruction phase adds value proportional to the design’s complexity.
Projects where the owner wants a single point of responsibility. CM-at-risk consolidates design coordination and construction delivery under one contract, the CM-at-risk is responsible for managing the design team’s input during preconstruction and for delivering the construction phase under the GMP. Owners who want a single throat to grab in the event of problems prefer the CM-at-risk structure.
Projects with tight budgets. The CM-at-risk’s early cost estimating and value engineering input during design can prevent the budget overruns that occur when a completed design is priced for the first time at bid. For a developer working with a fixed budget, the CM-at-risk’s ability to inform design decisions against real cost data is more valuable than competitive bidding a completed design that turns out to be over budget.
Projects in limited subcontractor markets. In markets where subcontractor capacity is constrained, the CM-at-risk can develop early subcontractor commitments during the preconstruction phase, securing trade pricing and capacity before the design is complete, when the CM-at-risk has better leverage with subcontractors than a late-arriving GC bidding a completed design.
The Owner’s Representative Role Within CM-at-Risk
Owners who engage a CM-at-risk sometimes assume that the CM-at-risk fills the owner’s rep function, that the CM-at-risk is managing the project on the owner’s behalf. This assumption is incorrect and potentially costly. The CM-at-risk’s primary obligation is to deliver the project within the GMP, an obligation that is aligned with the owner’s interests but is not identical to them. The CM-at-risk will make decisions about subcontractor selection, schedule management, and change order resolution that reflect their financial interest in managing to the GMP, which may not always align perfectly with the owner’s independent interests.
An owner engaging a CM-at-risk benefits from retaining an independent owner’s representative to manage the CM-at-risk relationship, verifying that the CM’s decisions align with the owner’s interests, reviewing the GMP documents before execution, and providing independent oversight of the GMP contingency to ensure it is being managed for the owner’s benefit.
Innergy Integral provides these services in Phoenix, AZ and across our six-state footprint.
Related: Construction Management Services · Guaranteed Maximum Price Contract · Owner’s Representative Services · Construction Management Guide
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