What is Construction Management At Risk?

by Eric Dontigney; Updated September 26, 2017
Men and women in hardhats looking at blueprints on construction site

The traditional approach to construction uses a three-stage process. The architects or engineers develop a complete design. The property owner takes bids on the contract from general contractors and awards to the contract to one of the bidders, typically based on the lowest price. The general contractor then moves forward with the actual construction. Construction management at risk takes a different approach and brings in a contractor to consult at the design phase.

Construction Management at Risk

Under a construction management-at-risk approach, the property owner or agency selects a contractor to consult based the contractor’s previous experience and fees, rather than a bid. This shift in approach stems from the recognition that specialist subcontractors take on a significant role during construction, and the consulting contractor brings an expert understanding of how that impacts a project. The consulting contractor provides a number of functions during the design phase, including constructability reviews, estimates and even product specifics to aid in developing cleaner designs. The property owner and the consulting contractor settle on a fixed price for the project, called a guaranteed maximum price. Once an agreement is struck, the consulting contractor transitions to the role of general contractor and construction begins.

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