Procurements & Supplements
Section I-5
Construction Management - CM as Constructor
The Construction Manager as Constructor (CMc) Project Delivery System allows an Owner to engage the Constructor early in the project to provide cost, schedule, and constructability advice to the Owner and Design Team. This is the same method often referred to as CM at Risk. Use of the term Construction Manager as Constructor is recommended to more clearly identify the CM’s role in this delivery system, and to be consistent with the language in prevailing contract forms. With this system, the CMc can assume responsibility and risk for budget and schedule management.
The CMc delivery system differs from the Design-Bid-Build system, in that it offers a more collaborative way for an Owner to engage a project team. When utilized early in the project, this system allows the CMc to provide preconstruction services in the form of assistance to the Owner prior to construction, offering schedule, budget, and constructability advice during the project planning and design phases, which can help facilitate more informed decisions relative to the project budget and scope. Thus, instead of a traditional General Contractor, the Owner works with a hybrid Construction Manager/General Contractor, whose services can better compliment the services of the Design Team. This approach can be especially valuable in complicated projects.
After the design phase of the project, the role of the CMc may become similar to a GC’s role in a traditional Design-Bid-Build project delivery system, in that the CMc assumes financial responsibility for the construction of the project. The CMc often self performs some of the work while subletting the remaining work to trade subcontractors and material suppliers. The CMc often guarantees completion of the project for a fixed negotiated price (usually referred to as a Guaranteed Maximum Price, or GMP) at an agreed-upon point during, or following, the design phase. It is, however, critical that the Owner understand the degree of certainty provided by this delivery system.
Selecting the CMc
The CM as Constructor plays a critical role in the success of a project. Since a commitment is made to the Constructor early in the process, a heavy emphasis should be placed on the proper selection of the CMc to provide the best value to the Owner. A Qualifications-Based Selection System (similar to that described for Design Professionals in BPG Section I-2) is frequently used to solicit proposals from a reasonable number of prequalified Constructors. Solicitations should identify the scope of preconstruction services, general conditions, and the CM fee structure. It may be appropriate for the Architect to assist the Owner in this process, if they already are on board. Conversely, if the CMc is established first, it would be appropriate for them to assist with the selection of the Architect.
Commonly used contract forms in the industry for this project delivery system are:
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AIA Document A133-2007 Standard Form of Agreement Between Owner and Construction Manager as Constructor or the ConsensusDOCS 500 Owner/Construction Manager & General Conditions (At-Risk) - for these contract forms the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price.
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AIA Document A134-2007 Standard Form of Agreement Between Owner and Construction Manager as Constructor or the ConsensusDOCS 510 Owner/Construction Manager Agreement & General Conditions (cost of work, Preconstruction Option) - for these contract forms the basis of payment is the Cost of the Work Plus a Fee without a Guaranteed Maximum Price.
Managing Roles / Responsibilities
Comprehensive management of every stage of the project, beginning with the original concept and project definition and continuing through the design, procurement, and construction phases, yields the greatest possible benefit to Owners from Construction Management. Construction Management provides for very consistent schedule and budget management. It is imperative that the Owner defines and maintains a clear understanding of the roles of the project team and fosters a collaborative working relationship.
Understanding Risk
Understanding risk, risk management, and the responsibility for risk is critical in all project delivery methods. Design and construction projects are risky. Unknown conditions, marketplace volatility, material supplies, permitting processes, and weather conditions are just a few examples of risk factors. Contractors, architects, engineers, and building owners who build frequently come to know these risks. However, the assumption of and responsibility for risks are often and easily misunderstood – especially by inexperienced parties. The best path to clear understanding is open communication. It is incumbent on each party to a contract to assure that the other parties have clear and consistent understanding of project risk. It is best to assign risk to the party best able to control and insure it. With mutual understanding these risks can be assigned and managed properly for project success.
Budget Management
In choosing a project delivery system, the Owner needs to take into account the size and complexity of the intended project. Use of CMc on a smaller project may not be cost effective. During the design of a project, a process that can involve many months of coordination between the Design Team and Owner, the CMc assists with estimating the cost of constructing a project based on a description from the Design Team and Owner that conveys the design concept and what is proposed to be built. If certain aspects of the preliminary design are identified as probable factors causing a cost estimate to exceed the Owner’s budget goals, a group decision can be made to modify the design, saving time, effort, and design fees for re-designing and modifying completed construction documents. With this level of informed decision-making during the early design phases of a project, the Owner may also be able to procure or identify additional funding for the project rather than reduce the desired scope or quality.
In a CMc contract with a GMP, the Owner still faces the potential of change orders for increased cost and schedule. The CMc’s risk needs to be appropriately defined to exclude risks of cost and time caused by changes outside of the CMc’s control; such as unforeseen changes in scope, delays caused by severe weather, and slow approval processes by jurisdictions having authority.
Advantages of the CMc Project Delivery System
In addition to having ‘checks-and-balances’ similar to the Design-Bid-Build approach, an Owner deciding to use the CMc approach can realize additional benefits. Primary among them is the opportunity to include a contractor's perspective and input as part of the planning and design decisions. The CMc delivery system is a contractual vehicle to implement lean construction principles and tools, like Target Value Design, which allows for better collaboration between the different project participants at early stages while the project design is still be developed.
Furthermore, the CMc may find basic performance specifications or abbreviated specifications to be adequate. Since the CMc's input can facilitate early decisions on materials, specifications, equipment types, and other project features, construction cost and time savings can result for the Owner.
In addition to providing the Owner with the benefit of preconstruction services, which may result in advantageous changes to the project, including cost savings, the CMc scenario offers the opportunity to begin construction prior to completion of the design. If portions of a design can be firmly established and documented earlier in the process, the CMc can bid and subcontract portions of the work earlier than in other processes, often while design of unrelated portions is still in progress. In this scenario, the CMc and Owner can negotiate a GMP based on a partially completed design, which includes the CMc's estimate of the cost along with allowances for the incomplete design aspects.
Owners should understand that competitive pricing is included at all levels of pricing in the CMc project delivery system. Initially, the CMc selection process may include an evaluation of CM fees, and preliminary opinions of probable cost (if a preliminary design is established), in addition to qualifications, capabilities, experience, and references. Whether a GMP is involved or not, the majority, if not all, of the work and materials will be provided by subcontractors and suppliers competitively procured by the CMc. The Owner should review all bids received, and subcontracts negotiated, with the CMc. Therefore, the Owner has more control and insight into the cost components of the project.
Disadvantages of this Delivery System
As with all project delivery systems, extensive communication and openness amongst all project team members is essential to ensure a successful project delivered by a CMc system. Without this effort, in the throes of financial responsibility and time management, disagreements and adversarial relationships may result. This paradigm can involve more time devotion and an adjustment to philosophies than required with other systems, to realize the advantages to all involved.
Not every Design Team, Construction Team, and Owner are naturally suited to work effectively within this collaborative environment. Some Owners may not be able to prepare the non-financial input required by a team approach, and some design and construction professionals may not be able to work well within a project team philosophy. Participants should be chosen carefully, and the system approached with some introspection.
Maintaining Positive Working Relationships among the Owner, Design Team, and Constructor
As with all successful projects, an atmosphere of cooperation and mutual respect needs to be maintained throughout the course of the project for this collaborative process to function properly. Each party (Owner, Architect, Engineers, and Constructor) needs to be allowed to offer input and expertise during all phases. This input also needs to be considered, rather than challenged, by the other members of the team. Input from the CMc about any assumptions made, or deviations from the preliminary design description taken in the course of their cost estimating, must also be conveyed to the Design Team to ensure the design is developed in concert with the project budget.
Through constant and open communications between all parties during all phases of the project, the CMc system maximizes awareness amongst the Owner, Design Team and CMc of each other’s goals and expectations. This allows each party to perform their part of the project in the most efficient manner.
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Glossary Terms for the Best Practices Guide
History of Recommendation:
Revised March 2014
Approved July 2010
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