For firms delivering construction management on an at-risk basis, this seems to be the best of times. “In our markets, construction managers are turning down more work than they say yes to, and the specter of owners chasing contractors gives one pause,” says Bart Eberwein, vice president of marketing at Hoffman Construction Co.
This opinion is borne out in the combined revenue figures for ENR’s Top 100 CM-at-risk firms. Total CM-at-risk revenue for the group rose in 2006 to $74.10 billion, up 17.4% from $63.10 billion in 2005. But even more surprisingly, although international CM-at-risk revenue actually fell 6.3% from 2005 to 2006, domestically it rose 20.1%, to $67.73 billion, in 2006.
The construction boom is creating increased demand for CM not just from the existing client base, but from outside investors and developers. “We are seeing more new money come into the industry from people who may not know construction, but who do know what they want and understand the bottom line,” says Bruce D’Agostino, executive director of the Construction Management Association of America, McLean, Va. “The problem is that these new owners don’t always have the sophistication to know that the way a project is initially designed is not always the way it turns out. They need to be educated and a construction manager can help.”
One of the largest CM-at-risk firms is J.E. Dunn. “The bulk of what we do is CM-at-risk. It’s our preferred method of project delivery,” says Greg Nook, Dunn’s executive vice president of marketing. “One of the primary values is that it gets the architects and contractors talking. Each brings its own strengths and a collaborative approach lets each draw on the strengths of the other.”
For owners, the increasing awareness of green building and sustainability in design is pushing them toward CM-at-risk over design-build, as they are looking for more, not less, input into design. “Design-build is for owners that feel they don’t need to be at the table for major decisions,” says Eberwein. “Design-build is like a parent who sends his kid to a military school and expects him to come back a model child. CM-at-risk is more like the parent who goes to every PTA meeting and wants to review home- work every night to make sure everything is right. Design-build is not for everyone.”
CM firms claim that going at-risk can enhance green building. “In five years, you won’t even hear green mentioned as it will be an accepted part of the construction process, the way that the Americans for Disabilities Act was a hot topic for a few years until it just became part of the process,” says Nook. He says working as a CM-at-risk in close collaboration with the architects helps facilitate sustainable design. For example, Dunn worked as the at-risk CM with architect Thom Mayne of Morphosis, Santa Monica, Calif., and DLR, Omaha, on the first Gold LEED federal courthouse in the country, the 266,743-sq-ft Wayne L. Morse U.S. Courthouse in Eugene, Ore.
Public sector demand is a major driver for the increase in CM-at-risk. “We are seeing a lot more CM-at-risk in the public sector,” says Garry E. Nunes, national director of construction services for PB Americas Inc. He says that this growth is simply public agencies anxious to transfer risk. “We’ve adapted and grown our at-risk capacity to meets owners’ needs.”
Nook says that much of the gain for CM-at-risk in the public sector has come at the expense of agency CM. “You are seeing this especially in higher education, state agency work and in the federal sector.” Nook believes that CM-for-fee is a lot better than the more traditional design-bid-build in the public sector, but some public agencies are seeing some drawbacks and are going CM-at-risk as an alternative.
CMAA is anticipating hitting a major milestone this year. “We should top 1,000 certified CM professionals this year,” says D’Agostino. He says that CMAA has certified 800 people so far and that there are 400 currently in the certification program. D’Agostino says that accreditation by Washington, D.C.-based American National Standards Institute in March 2006 “has really helped us in demonstrating the value of hiring a CMAA-certified construction manager.”