CM at-Risk & the Guaranteed Maximum Price (GMP)
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Here's one that matters more than its name lets on — CM at-Risk & the Guaranteed Maximum Price (GMP). Cut through everything, and it's this: CM at-Risk brings the builder in early for preconstruction, then has them guarantee a GMP and hold the subcontracts — combining collaborative early input with cost certainty and shared savings, ideal for complex projects needing a trusted builder. Get comfortable here and the rest of this trade gets a whole lot less intimidating.
In Construction Manager at-Risk (CMAR), the owner brings a CM on board during design to provide preconstruction services (budgeting, constructability, scheduling), and the CM then holds the trade subcontracts and guarantees a price — the GMP — to build it, becoming "at risk" for overruns above that number.
How it's structured
- Two contracts (owner–designer, owner–CM), but the CM joins early (during design) — unlike DBB.
- The GMP caps the owner's cost; savings below it are often shared (a shared-savings clause), aligning incentives.
Going Deeper (Intermediate)
The value of CMAR is preconstruction: the CM's early input improves the budget, schedule, and constructability while the design is still flexible. The GMP is set around design development (~60–90% design) with appropriate contingencies, on an open-book basis (cost of work + CM fee + general conditions). Understand the two contingencies — the CM's contingency (for the CM's risks) vs. the owner's contingency (for owner changes).
Advanced / Pro-Level
Master the GMP's components and contingency rules — who owns the savings, what the CM contingency covers vs. what becomes a change order. The "at-risk" shift means the CM moves from advisor to builder holding the subcontracts and performs buyout against the GMP (beating it drops to shared savings/margin; blowing it eats the CM's fee). CMAR fits complex projects that need early input, cost certainty, and a trusted builder — and it's increasingly allowed for public owners.
Practice Challenge
A CM at-Risk sets a $10M GMP and buys out the work for $9.4M, with a 50/50 shared-savings clause. What happens to the $600k? (Answer: the $600k under-run is split per the clause — ~$300k to the owner and ~$300k to the CM — which incentivizes the CM to drive savings while the GMP still caps the owner's exposure. Shared savings align both parties toward an efficient buyout.)
Takeaway: CM at-Risk brings the builder in early for preconstruction, then has them guarantee a GMP and hold the subcontracts — combining collaborative early input with cost certainty and shared savings, ideal for complex projects needing a trusted builder.
Educational overview — methods, contracts, and laws vary by project and jurisdiction; follow your specific contract and consult professionals.