World Class Approach to CM @ Risk Challenges

The Construction Manager at Risk project delivery processes are booming according to the June 9th issue of ENR.  Why?  A combination of larger, complex jobs; owner PM/CM's baby boomers retiring; and a still booming construction market.  Yes, Boom, Boom, Boom!

So what are key challenges associated with this project delivery mechanism and how can a partnering process help a project team address them?

1. Clarifying expectations relative to roles on a CM at Risk project – more specifically, who's at risk for what?

CM at Risk is new for many owners.  With this there can be a tendency to assume that a CM at Risk takes on all risk.  Not so of course.  The CM at Risk is not exactly on the same side of the table as the owner.  As one industry pundit put it, 'it should be named "CM At-Low Risk"'.  Partnering, for example, can ensure a truly collaborative relationship between owner, A&E and CM@R to optimize both quality and cost during the design assist phase.  This can minimize owner risks related to design errors and omissions; over budget costs; and, incomplete design documents.  It can also establish an understanding and process to ensure that the CM is neither too risk averse or conservative to truly optimize cost savings.

2. CM at Risk the CM@R operates in two distinct modes – managing this transition is key

First, being during the design phase when the CM@R is working in more of a design assist role the challenge is maximizing cost savings while maintaining a high level of quality. The second role is initiated upon the definition of a GMP (guaranteed maximum price) wherein the CM@R is working as more of a traditional GC. In partnering CM@R projects, we have found it useful to initiate partnering workshops at the outset of both of these phases inasmuch as they involve different players, roles, and project goals

3. Ensuring conformance to contract documents over the course of theproject (especially between owner and CM@R).

This can include definition of cost changes; quality; what is and what is not a change outside the contract documents.  And ongoing challenge is managing tradeoffs between what's within and without the GMP and unforeseen changes and owner adds.  When done well, the owner is given a fair and well informed choice when it comes to making these decisions.

4. An additional challenge is ensuring that the project design professionals have all the resources and support to ensure a project that meets owner expectations while minimizing costs = staying within the GMP. 

There can be a tendency to isolate/marginalize the A&E from the process.  An effective partnering process involves the A&E on a collaborative basis in managing cost, scope and quality tradeoffs

5. Managing the relationship with the commissioning provider

Ideally, the owner would want to ensure that the CM@R process evaluation process rewards those CM@R's that have commissioning expertise.  The 'end game' in our experience needs to be clearly defined and not necessarily limited by contract documents.  For example, on the Los Angeles MTA's Gold Line light rail project, they have developed partnership goals that speak to phased acceptance and going 'live'.

As long as the industry continues to pursue alternative methods of procurement which put a premium on qualifications over price, we will continue to see more CM@R projects.  A partnering process oriented toward this process can create the understanding up front that allows all stakeholders to not only understand but to define proactive goals and processes that lead to a mutual success.