Construction Manager at Risk in New York: How CMAR and a GMP Work

Construction manager at risk (CMAR) is how we deliver most of our fast-track and phased work in New York: galleries that need to open for a season, schools that have to be ready by September, townhouses where the scope keeps developing as walls come down. This article explains how the method works, what the owner gets and gives up, and what an owner’s representative should look at before signing.

What a construction manager at risk does

Under CMAR, the owner hires the builder early, often during design, and the builder commits to deliver the project for no more than a guaranteed maximum price (GMP). The contract is a cost of the work plus a fee: the owner pays the actual cost of labor, materials and subcontracts, plus a fixed percentage fee, up to the GMP. If the work costs more than the GMP for reasons within the contractor’s control, the contractor absorbs it. That is the “at risk” part.

The difference from a lump-sum general contract is when the builder joins and how the money is shown. In a lump-sum bid the drawings are finished first and contractors compete on one number. In CMAR the construction manager prices the project while it is still being designed, and the owner sees every cost behind the number.

Open book: what the owner sees

A CMAR job is typically open book. In practice that means:

• the owner and architect see the subcontractor bids, not just our totals;
• the owner takes part in selecting subcontractors and vendors;
• the fee is a fixed percentage agreed at the start;
• the owner controls an open budget, with contingencies and allowances shown as separate lines.

Because we carry carpentry, millwork and masonry with our own crews and shops, those trades are priced in the same open way as any subcontract, with labor and material shown separately.

The contracts: AIA A102 and A201

We typically write CMAR work on AIA A102, the standard owner–contractor agreement for cost of the work plus a fee with a GMP, together with AIA A201, the general conditions that set out how changes, payments, schedules and closeout are handled. Some owners prefer AIA A133, the agreement written specifically for a construction manager as constructor; the commercial logic is the same. Using standard AIA documents means owners, architects and lenders already know the terms, which shortens negotiation.

When CMAR is the right choice

CMAR works best when:

• the schedule is fixed and tight, such as a school renovation that has to happen between June and August, or a gallery opening tied to an exhibition;
• the design is not finished, but the owner wants to start early work such as demolition, excavation or structural steel;
• the building is old or occupied, so unknown conditions are likely and the owner wants to see how they are priced;
• the owner wants a say in which subcontractors are used.

A lump-sum contract is usually the better fit when the drawings are complete, the scope is stable and the owner’s priority is a single competitive number. We explain that method in General contractor in Brooklyn.

What owner’s representatives should ask before setting a GMP

• When is the GMP set? At design development it will carry more contingency than at 90% construction documents.
• Who owns the contingency, and how is it drawn down and reported?
• What happens to savings if the final cost comes in under the GMP?
• Which items are allowances, and how are they reconciled?
• What is in the fee and what is billed as general conditions?

We answer those in writing as part of the GMP proposal, so there are no surprises at the first requisition.

How we run it

Preconstruction starts with a budget against the architect’s current drawings, a constructability review and a schedule that shows the long-lead items. We then bid the trades, level the bids with the owner and architect, and set the GMP when the design is far enough along. You can read more about that phase in Preconstruction and estimating services in New York.

Recent CMAR-style work includes fast-track school renovations such as St. Hilda’s & St. Hugh’s School, where 21,000 square feet on three floors was rebuilt over a 12-week summer break, and phased work in occupied buildings such as the Montessori School in Brooklyn Heights.

Working with Eurostruct

Eurostruct has built in New York since 1988, from our headquarters at 228 Russell Street in Brooklyn. If you are weighing CMAR against a lump-sum contract for a project in Manhattan or Brooklyn, we are glad to review the drawings and talk it through. See how we approach each delivery method on our services page.