Construction Management At-Risk Use Expands at the Expense of Design-Build

In construction, alternative project delivery methods typically refer to design-build, construction management at-risk (CM@R or CMAR), and integrated project delivery (IPD). Design-build and CM@R have been commonly used for so long that it seems strange to call them “alternatives.” IPD and design-build are more written about as a subject matter.  However, CM@R is just as popular as ever, and some practitioners see CM@R as the project delivery method that delivers project schedule towards completion the fastest.  Experienced practitioners of CM@R like the ability to commence construction before all the design details for the entire project are determined.  In Iowa, both chambers of the legislative body recently approved legislation, Senate Bill 183, that expands the authorization to use CM@R on public projects and explicitly disallows design-build for public projects. This would make Iowa one of two states banning design-build for all public projects joining North Dakota.

Senate Bill 183 was actively supported by the Iowa Associated General Contractors and the Master Builders of Iowa. Chad Kleppe, President & CEO of MBI, offered these comments: “This has been a long-time coming for MBI and the building industry in Iowa.  We have tried different iterations of alternative project delivery by legislation for many years.  This time, MBI, other construction associations, design professionals including the architects and engineers, and many public owner groups supported [the bill] Senate File 183.  Our members are pleased that with this recent change, once signed into law, all public owners will have a choice when building their buildings.  They can utilize the traditional design-bid-build method or, for those owners with more sophisticated projects and schedules, enter into a construction manager at-risk delivery with a guaranteed maximum price contract.  We believe these deliveries will benefit the building industry at large and the public clients we build for.”

ConsensusDocs offers comprehensive standard contract documents including the CMAR 500 series documents.  Significantly, the ConsensusDocs 500 is a standard CM@R contract that integrates the general conditions into the CM@R agreement.  Payment to the builder is on a cost of the work basis with a guaranteed maximum price (GMP). Preconstruction services are included in the work scope.  Typically, at approximately 30 percent of design development (and significantly after contract signing), the Owner and Construction Manager (CM) set the GMP. Contractually this is done by the ConsensusDocs 500.1. Standard contract documents that support contract administration, such as a certificate of substantial completion, in the 200-series of documents for traditional contracting, are also well suited for CM@R projects. 

One of the most attractive benefits offered by CM@R is that it facilitates a General Contractor’s earlier involvement and the trades. In addition, procurement selection may factor in qualifications in a best-value or qualifications-based selection process.  This means that the CM and trades may be selected by a combination of qualifications and price called best value, instead of price considerations alone which are commonly used in design-bid-build.

Using CM@R opens the possibility of using other innovative contract provisions and addendums. For instance, the ConsensusDocs 541 Design-Assist and the ConsensusDocs 305 Lean Addendum. These “lean-lite” or transitional documents have been written with the CM@R project delivery method in mind as the primary use case scenario.  Because the builders are involved earlier, BIM and value engineering are more commonly used and executed more efficiently under a CM@R than design-bid-build.

Additional Resources

AGC’s Project Delivery page on CM At-Risk:

Industry Priorities