Construction Manager at Risk (CMAR): The Delivery Method That Puts the CM on the Hook for the Guaranteed Maximum Price

Construction Manager at Risk (CMAR, sometimes CMR or CM/GC) is a two-phase project delivery method: a preconstruction phase where the construction manager provides input during design, followed by a construction phase where the CM takes on the role of a general contractor at a Guaranteed Maximum Price (GMP) that caps cost exposure. The "at risk" part of the name refers to the GMP — if actual costs exceed the GMP, the CM bears the overrun.

CMAR has become the dominant alternative to traditional design-bid-build delivery on complex projects where the owner wants early CM input but doesn't want the design-build consolidation of design and construction responsibility. Public sector agencies have increasingly adopted CMAR for large projects; private owners use it on commercial, healthcare, higher education, and other complex work.

Two-Phase Structure

The CMAR structure is fundamentally about two phases:

The CM is typically selected during schematic design, participates through the rest of design development and construction documents, and then transitions to the construction role when the GMP is established. The owner maintains the contract with the designer separately — the designer reports to the owner, not the CM.

CM Selection

CMAR CM selection is typically based on qualifications plus some combination of fee and other factors — not purely low bid. Common selection approaches:

The selection doesn't determine project cost — that's set later through the GMP. The selection determines who will be the CM. Owners typically focus on the CM's experience with similar projects, the specific team proposed, preconstruction approach, and the CM's fee and general conditions.

Preconstruction Services

Preconstruction is where the CMAR model's value comes from. During design, the CM contributes:

The preconstruction phase fee is typically separate from the construction phase. Preconstruction fees might be a percentage of construction value, a fixed amount, or a time-and-materials arrangement. The specific approach depends on the contract.

The Guaranteed Maximum Price

The GMP is the defining financial feature of CMAR. The GMP is the maximum the owner will pay for the construction work (plus the CM fee and general conditions, depending on how the contract is structured). If actual costs come in below the GMP, the owner saves; if they exceed the GMP, the CM bears the excess.

GMP establishment typically happens when design is developed enough to allow pricing — often at 60-80% construction documents. The GMP process involves:

GMP proposals typically include explicit lists of assumptions (what the CM assumed about undrawn items), exclusions (what's not included), allowances (dollar amounts held for specific items), and contingency (CM-held buffer for unforeseen items). These lists determine what later design development or field conditions affect the GMP versus what the CM absorbs.

Shared Savings

If actual costs come in below the GMP, most CMAR contracts provide for shared savings between the owner and CM. Typical splits:

The shared savings mechanism creates incentive for the CM to manage costs aggressively. In a pure lump-sum contract, any savings go entirely to the contractor; in a pure cost-plus contract, any savings go entirely to the owner. Shared savings in CMAR provides middle ground — the CM benefits from good cost management but doesn't pocket all the savings.

Standard Contract Templates

Several contract templates support CMAR:

The AIA and ConsensusDocs templates take somewhat different approaches but cover the same essential elements — preconstruction scope, construction phase scope, GMP mechanics, subcontractor buyout, change management, shared savings, and termination.

Subcontractor Buyout

During the construction phase, the CM is responsible for managing the subcontractor tier just as a GC would. Subcontractor buyout — the process of selecting and contracting trade partners — is a major CM activity:

Open-book buyout is common in CMAR — subcontractor bids are shared with the owner and design team, providing transparency about the actual project costs. The CM typically needs owner consent for sub selections, particularly for major trades, ensuring the owner knows who's doing what on the project.

Change Management

Change management in CMAR operates within the GMP framework:

The GMP assumptions and exclusions determine which changes trigger GMP adjustments. Well-drafted GMP proposals clearly identify what was assumed, so later conditions can be evaluated against the baseline. GMP proposals that were vague about assumptions produce more change-order disputes.

Public Sector CMAR

Public sector CMAR has specific variations due to procurement law constraints. Many states have authorizing statutes that allow agencies to use CMAR only in specific circumstances or with specific procedures. Common public CMAR features:

The public CMAR model provides much of the collaboration and cost control of private CMAR while preserving public procurement principles through structured selection and open buyout.

Self-Performed Work

Whether the CM can self-perform work (do work with its own forces rather than subcontract it) varies by contract and jurisdiction. Public CMAR projects often restrict self-performance — the CM must bid the work like any other trade, or self-performance requires specific owner approval. Private CMAR often allows self-performance more readily, but at the CM's actual cost (not a marked-up rate).

Self-performance can create conflict of interest concerns. A CM who self-performs a trade and also evaluates bids for that trade has an incentive to steer work to themselves. Owners often require third-party cost verification or competitive benchmarking for self-performed work.

CMAR vs. Design-Build vs. Design-Bid-Build

CMAR sits between traditional design-bid-build and design-build in delivery method characteristics:

CMAR preserves the owner-designer relationship (unlike design-build where the designer works for the DB entity), which some owners prefer. CMAR provides early CM input (unlike design-bid-build), which helps with cost control and constructability. The tradeoff is that design responsibility remains with the designer, not the CM.

Bottom Line

Construction Manager at Risk delivery combines early CM involvement during design (preconstruction phase) with GMP-based cost control during construction. The CM provides constructability, cost, schedule, and market input while the design is still developing, then takes on the GC-style construction role under a Guaranteed Maximum Price that caps owner exposure. Shared savings provide incentive for cost control. Standard contract templates (ConsensusDocs 500, AIA A133) structure the relationship. CMAR has become the dominant alternative to design-bid-build on complex projects where early CM input adds value but the owner wants to preserve direct contract with the designer. CM selection is qualifications-based rather than pure low-bid; GMP establishment requires design development to a pricing-ready level; and subcontractor buyout with open-book transparency characterizes the execution phase. Contractors successful in CMAR develop preconstruction capability (cost estimating, scheduling, constructability) alongside construction execution — the two-phase model rewards firms that excel at both.