CMAR (Construction Manager at Risk)

Construction Manager at Risk, often abbreviated as CMAR (and sometimes called CM/GC, CM at Risk, or CM-as-Constructor), is a delivery method that sits between design-bid-build and design-build. The contractor is selected during the design phase, before the design is complete, and provides preconstruction services through the design phase. At a defined milestone, the contractor and the owner negotiate a guaranteed maximum price (GMP), and the contractor takes on the construction at risk for the GMP.

The structural distinction from design-build is straightforward: under CMAR, the owner holds the design contract directly with the architect or engineer. The contractor does not take on design responsibility. Under design-build, the design contract is held by the design-build entity (typically the contractor with the design firm as a subconsultant). The CMAR contractor advises during design but does not own the design.

The structural distinction from design-bid-build is the timing. Under design-bid-build, the contractor is selected after the design is complete and bids against finished documents. Under CMAR, the contractor is selected during design and contributes to the design through the preconstruction services phase. The design-bid-build contractor builds what was designed; the CMAR contractor helps shape what gets designed.

The preconstruction services phase is the part of CMAR that distinguishes the method from anything else the contractor does. The contractor is engaged during design, paid a preconstruction services fee, and contributes specific services to the design effort over a period that can run from a few months to multiple years depending on project scale.

What the contractor actually does

Preconstruction services typically include constructability review of the design as it develops, value engineering analysis to identify opportunities to reduce cost without sacrificing scope or quality, market pricing of major systems and materials, schedule development from an early conceptual schedule through detailed construction sequencing, subcontractor pre-qualification and early-stage market outreach, and coordination input on phasing and logistics. The contractor brings construction execution knowledge to a process that would otherwise rely on the design firm’s assumptions about how the work will actually be built.

The preconstruction fee

The contractor is paid a preconstruction services fee for the work performed during the design phase. The fee structure varies; some owners pay a fixed lump sum, some pay an hourly rate against an estimated effort, some pay a percentage of the eventual construction cost as part of the larger CMAR fee. The fee is intended to cover the contractor’s direct cost of the preconstruction work, not to provide construction-stage profit. Contractors who price the preconstruction phase like construction work tend to overprice it; contractors who price it as professional services tend to get the math closer to right.

Open-book practice

Most CMAR engagements operate on an open-book basis during preconstruction: the contractor shares cost data, market pricing, and budget analysis with the owner and the design team. The transparency is part of how the contractor earns the trust that supports the GMP negotiation later. A contractor who treats preconstruction as adversarial or transactional tends to produce a strained GMP negotiation and a difficult construction phase.

Selection criteria for preconstruction

Owners select CMAR contractors primarily on qualifications and approach rather than on construction price. The price comes later, at the GMP. The selection at the start is about which contractor will be the right partner for the design phase, which contractor brings the right experience to the project type, and which contractor will negotiate the GMP credibly. Construction price is not absent from the selection (the contractor’s fee structure is part of the proposal), but the dominant evaluation is qualifications-based.

At a defined milestone (typically when the design reaches a level of completion specified in the contract, often 60% to 75% construction documents), the contractor and the owner negotiate the guaranteed maximum price for the construction phase. The GMP is the ceiling above which the contractor cannot bill the owner; if actual cost exceeds the GMP, the contractor absorbs the difference.

The GMP build-up

The GMP is built from the contractor’s detailed estimate of the project at the design milestone. The build-up includes direct construction cost (labor, material, equipment, subcontractors), general conditions, contingencies (typically a contractor’s contingency for items not yet defined and a separate owner’s contingency for owner-directed changes), bonds and insurance, and the contractor’s fee. The GMP is the sum.

Negotiation and acceptance

The owner reviews the GMP build-up against the owner’s independent cost estimate, the market data the owner has access to, and the design firm’s constructability input. The negotiation can take weeks. The transparency built during preconstruction is what supports the negotiation: an owner who has been receiving regular cost updates throughout design has a much closer reference point for the GMP than an owner who is seeing the contractor’s pricing for the first time at the GMP submission.

Shared savings

CMAR contracts typically include a shared-savings provision. If the actual cost of construction lands below the GMP, the savings are split between the owner and the contractor at a percentage specified in the contract. The provision creates an incentive for the contractor to control cost during construction without giving the owner unlimited upside on cost reduction. Common splits are 50/50, 75/25 in the owner’s favor, or other ratios negotiated for the specific project.

If the owner declines the GMP

In some CMAR structures, the owner has the right to decline the GMP and re-bid the construction work as design-bid-build. The contract specifies what happens in that case: the contractor is typically paid for the preconstruction services performed, but the construction relationship ends. The provision protects the owner from being held hostage by a CMAR contractor who proposes a GMP the owner considers excessive. In practice, the provision is rarely exercised because the negotiation usually produces a workable GMP, but the contractual right matters for the leverage it creates during the negotiation.

Once the GMP is accepted, the contractor moves into construction at risk for the GMP. The construction phase looks much like a construction phase under any other delivery method: the contractor mobilizes, executes subcontracts, manages the work, processes change orders, and delivers the project.

Open-book continues

The open-book practice typically continues into construction. The owner sees actual cost as the work progresses, sees the contingency drawdown, and sees the savings or overruns developing in real time. The transparency supports the relationship through the construction phase and supports the eventual savings calculation at project close.

Subcontracting

Subcontractors are typically procured competitively during preconstruction or at the GMP transition, with the owner sometimes participating in or reviewing the subcontractor selection. The competitive sub procurement is part of how the CMAR pricing stays defensible: an owner who can see the sub bids and confirm the contractor is selecting competitively has more confidence in the overall pricing than under a delivery method where sub selection is opaque.

Change orders

Change orders during CMAR construction work like change orders on any other contract structure. Owner-directed changes are processed through the owner’s contingency or as additions to the GMP. Differing site conditions are addressed through the standard differing-conditions clauses. Design changes that flow from design-firm errors are addressed against the design contract, which the owner holds directly. The contractor’s exposure to design issues is more limited than on design-build but is also more limited than the contractor sometimes prefers; design-firm errors that affect the construction can produce difficult three-way conversations between the owner, the design firm, and the contractor.

Closeout and savings calculation

At project closeout, the actual cost is reconciled against the GMP. If actual cost is below the GMP, the savings are calculated and distributed per the shared-savings provision. If actual cost is above the GMP, the contractor absorbs the overrun (subject to any change orders that adjusted the GMP during the project). The reconciliation happens through final billings, audit if required by the contract, and the closeout accounting standard for the contract structure.

Owners pick CMAR when they want a contractor’s input during design, want to maintain direct control over the design relationship, and want some price certainty earlier than design-bid-build provides without taking on the design responsibility shift that design-build requires.

Public university and institutional work

Public universities, K-12 school districts, healthcare systems, and similar institutional owners frequently use CMAR for major capital projects. The structure fits institutional capital programs well: the design relationship stays in the owner’s hands (often with a long-standing A-E firm the institution prefers to use), the contractor brings construction expertise to the design phase, and the price is established at a point that supports the institution’s budget approval process.

State and municipal work

CMAR authority varies by state. Some states authorize CMAR broadly for public construction; others authorize it only for specific agency types or specific project size thresholds. Contractors pursuing state and municipal CMAR work check the state’s enabling statute alongside the procurement to confirm the structure is authorized for the project type.

Federal CMAR

Federal CMAR is less common than design-build or design-bid-build but exists in specific contexts. The DoD has used CMAR-style structures on certain MILCON projects; some civilian agencies use CMAR for specific project types. The federal authority for CMAR-style procurement is more restricted than the state-level authority on public work; most federal contractors building CMAR practices do so primarily on state, municipal, and private work rather than federal.

Private commercial work

Private institutional owners (corporate campuses, healthcare systems, large mixed-use developers) sometimes use CMAR-style structures for major projects. The private side has more flexibility on contract structure than the public side; the GMP-with-shared-savings model can be customized in ways that public procurement statutes often constrain.

Contractors with successful CMAR practices invest in the capabilities the method requires. The investments are different from what design-bid-build or design-build practices need.

Preconstruction-services capability is the most distinctive. The contractor needs estimators, superintendents, and project managers who can contribute usefully to a design effort: reading drawings at varying levels of completion, identifying buildability concerns, sourcing market pricing on materials and systems before subcontractor pricing is available, developing schedules from incomplete information. Not every estimator or PM has the temperament for this work. Firms with mature CMAR practices typically have a small group of senior staff who handle the preconstruction-services side and rotate them across active projects.

Open-book pricing infrastructure is the other distinctive capability. The accounting systems that support CMAR have to produce cost reports the owner can review, distinguish between owner-billable and contractor-absorbed costs cleanly, and support the savings calculation at closeout. Contractors who run CMAR through their standard project-accounting setup often discover at closeout that the open-book transparency the owner expected was not actually delivered, which produces difficult conversations during the savings reconciliation.

The bid-side discipline on a CMAR procurement is different from design-bid-build or design-build. The proposal narrative addresses the contractor’s preconstruction capability, the team that will handle the preconstruction services, the firm’s experience with similar CMAR engagements, and the fee structure. Construction-side qualifications matter, but the dominant content is preconstruction-side. The ScalaBid Submission Packageon a CMAR procurement reflects the method: the proposal narrative is structured around the preconstruction services and the GMP transition, the compliance matrix tracks the qualifications-evaluation criteria, and the action checklist covers the contractor-supplied items the procurement requires. The contractor’s preconstruction team handles the substantive content; the package surfaces the requirements and keeps them visible across the response.