In construction manager at risk, the owner hires a construction manager early, often during design, to provide estimating, constructability reviews, scheduling and value engineering. Once the design is far enough along, the CM commits to a guaranteed maximum price (GMP) and takes on the risk of delivering within it, usually holding the trade subcontracts directly. The owner holds a separate contract with the architect.
Why it matters
The CM earns its place by catching problems before they’re built. Preconstruction estimates must be honest because they become the GMP. After that, the job is open-book: owners audit costs, contingency draws and buyout savings.
Worked example
Illustrative: during preconstruction on Riverside Medical Center, the CM’s estimate runs $49.8M against an owner budget of $48.5M. Value engineering and scope tweaks close the gap, and the GMP is set at $48.2M including contingency and fee. After that, approved owner changes, like CO #14 for $86,400, adjust the GMP; the CM’s own misses don’t.
Common mistakes
- Setting a GMP on drawings that are too early, with thin contingency.
- Mixing buyout savings into contingency without telling the owner.
- Treating preconstruction as a sales phase instead of a real estimating effort.
How os.construction handles it
We’re building precon estimates, the GMP, buyout and cost forecasting on one data model so numbers carry forward instead of being retyped. It’s in development with founding contractors.