CM-at-Risk on Infrastructure: Building Consensus
As many commercial contractors know, construction management-at-risk (or CM-at-risk) has become a preferred delivery method in many markets such as education and health care. CM-at-risk engages the builder early in the development process and entails a commitment by the contractor to deliver the project within a guaranteed maximum price, or GMP. In Texas, CM-at-risk has been primarily limited to commercial construction in the public sector; but in 2007, legislation changed the definition of what makes a project eligible for CM-at-risk delivery.
CM-at-risk is now an option for public agencies responsible for infrastructure such as water utilities, flood control, transit and transportation. These owners were limited to using the traditional low-bid model, which often goes something like this: contractor finds problems in the drawings or conflicts in the field; change orders are needed; project takes longer and costs more than expected; owner blames contractor; contractor blames engineer; nobody is happy in the end. While this may not always be the case, chances are we’ve all been a part of a job like this.
A Collaborative Approach Focused on Best Final Cost Utilizing a CM-at-risk approach for infrastructure construction, if properly implemented, can help eliminate some of the pitfalls of hard-bid construction, resulting in a project with the best final cost—not just the initial lowest bid. The construction manager can have a positive impact early in the engineering process, particularly with project coordination. Through constructability reviews and value analysis input, the result is higher quality engineering documents, which in turn reduce risk to the owner and the contractor. A better understanding of documents reduces risk of the unknown or risk of uncertainty that contractors often have on hard-bid projects. And since risk directly translates to cost for contractors, if it can be reduced, so will the project cost.
The GMP component of the CM-at-risk delivery distinguishes it from construction manager agency delivery because the owner gets the benefit of the risk transfer associated with traditional hard-bid project delivery and also gets the owner-advocacy that the CM agent provides. Above all, CM-at-risk opens the door for collaboration early on between contractor and design teams to work hand-in-hand throughout the design process toward a common goal–client satisfaction.
One scenario where CM-at-risk offers strong benefits is in water and wastewater treatment projects, particularly expansions. These always include significant underground mechanical and piping systems and require close coordination. Having a contractor involved during the design phase can help identify and solve many of the issues that typically arise due to unknown or inaccurate underground conditions often encountered in hard-bid treatment-plant projects.
In 2009, McCarthy was awarded one of the first CM-at-risk water-treatment projects in North Texas. The project for Tarrant Regional Water District involves construction of a 1,600-acre wetland near Richland Chambers Lake. Realizing the inherent risks associated with a construction project in a flood plain, TRWD determined that CM-at-risk would be the best delivery method, allowing owner and contractor to understand, share and mitigate the risks of the project and ultimately reduce the project cost. McCarthy has been in preconstruction for nearly a year, collaborating with design engineers.
A Look at the Benefits The benefits of CM-at-risk are varied. A key benefit stems from an owner’s ability to select a construction manager through a “best-value” approach, choosing a contractor based on construction expertise and ability to provide preconstruction services during the design and engineering phase. Owners are no longer required to use a contractor solely because they are the lowest bidder. Owners are also able to make informed decisions during the design process and manage the true cost.
The subcontractors and vendors benefit from CM-at-risk because it improves coordination among the trades. With everyone involved earlier, each team member is able to have a voice in the design and collaborate on the project. This process ensures subcontractors will have a better understanding of the schedule so they can pre-plan their resources to be more efficient and ultimately more cost competitive.
The benefits for architects and engineers relate back to connectivity with all parties involved. A contractor’s perspective during the design process can lead to unique cost-saving ideas and better coordinated design documents, resulting in fewer requests for information, change orders, conflicts and miscommunication. All of this results in smoother construction administration duties for design teams during construction.
As a result of building consensus, pre-planning and better design documents, there are typically fewer problems during construction. While it is difficult to quantify the direct savings associated with this, the result is a higher quality, more efficient project.
An Exciting Alternative? CM-at-risk offers an exciting alternative for infrastructure projects. As public agencies gain experience with the collaboration that comes from the CM-at-risk process, more infrastructure projects will be delivered in this manner.