Summary of "An Introduction to Construction Manager at Risk"

This video presentation, led by Casey Patton and Angie Fannu, provides a detailed overview of the Construction Manager at Risk (CMAR) project delivery method, especially as it applies to municipalities in Iowa. The discussion includes a comparison of available public project delivery systems, the benefits and operational details of CMAR, and practical guidance for municipalities considering this new option.

Main Ideas and Concepts

1. Project Delivery Systems Overview for Iowa Municipalities

Design-Bid-Build (Traditional)
- Owner hires a design professional.
- Design is completed fully before public bidding.
- Contractor with lowest responsible bid is awarded the project.
- Owner holds contracts with both designer and contractor.
- Contractors cannot provide input during design to maintain fairness.
- One large bid package issued at once.
- Change orders handled post-contract.
- Scheduling: Design → Bid → Award → Construction.
- Challenges: Lack of market input during design, inflexible to supply chain issues, and pricing uncertainty especially in volatile markets.
Construction Manager (CM) Agency
- Owner hires design professional and separately hires a CM as an advisor.
- CM brought on early to advise on constructability, scheduling, and budgeting.
- Owner holds contracts with designer and all prime contractors.
- CM manages day-to-day construction activities and coordination but does not hold contracts with subcontractors.
- Multiple prime contracts are common.
- CM provides market insight and helps manage expectations but does not guarantee project cost.
- Scheduling allows overlapping of design and construction phases.
- Owner manages multiple contracts and payments.
Construction Manager at Risk (CMAR)
- Newly authorized in Iowa (effective July 1).
- Owner holds contracts only with the designer and the CMAR.
- CMAR holds contracts with all prime contractors and assumes risk for cost overruns.
- CMAR acts as both advisor during design and general contractor during construction.
- Guaranteed Maximum Price (GMP) is established, protecting owner from cost escalations except owner-driven changes.
- CMAR can self-perform work with competitive bidding.
- Enables early involvement of CMAR for better cost control, schedule compression, and constructability input.
- Public bidding laws still apply to subcontractor contracts.
- Reduces owner’s contract management burden.
- Provides better control over subcontractors and improved ability to enforce schedules and quality.
- Particularly suited for complex vertical projects with multiple trades.
- Not allowed for heavy highway, roads, bridges projects under Iowa law.

Key Benefits of CMAR Delivery Model

Team Approach: Early involvement of CMAR fosters collaboration between owner, designer, and builder.
Informed Decision-Making: CMAR provides real-time market feedback on materials, labor availability, and pricing.
Cost Control: GMP protects municipalities from unexpected cost increases.
Schedule Efficiency: Overlapping design and construction phases compress project timelines.
Risk Management: CMAR assumes risk for cost overruns and manages subcontractors directly.
Improved Project Closeout: CMAR involvement ensures better warranty management and punch list completion.
Flexibility with Bid Packages: Ability to issue multiple bid packages tailored to market conditions.
Self-Performance: CMAR can self-perform certain work, helping with schedule and quality control.

Important Considerations & Practical Notes

When to Bring CMAR Onboard: Ideally soon after project scope is defined, typically after schematic design or when the building program is established.
Project Size: CMAR is generally advantageous for projects over $3 million or those with multiple trades and complexity.
Contingency and GMP Setting: Contingency percentages decrease as design progresses; GMP is often set around 60% design development.
Contractual Differences:
- Design-Bid-Build: 2 contracts (designer and contractor).
- CM Agency: 3+ contracts (designer, CM, multiple primes).
- CMAR: 2 contracts (designer and CMAR, who holds prime contracts).
Bonds and Guarantees: CMAR provides performance and maintenance bonds similar to traditional contractors.
Sales Tax Exemption: Typically remains with the municipality and must be clearly stated in bid documents.
Funding and Regulations: Interaction with federal and state funding programs (like CDBG, SRF) is still being clarified.
Surprises and Risks: Unforeseen site conditions, weather, and supply chain issues remain challenges but are mitigated by early CMAR involvement and contingency planning.
Smaller Communities: May require assistance from design professionals or owner's reps to prepare RFQs/RFPs and manage the CMAR selection process.