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CONSTRUCTION MANAGEMENT AT RISK
AGC Alabama
Birmingham Section Meeting
November 5, 2012
Prepared by:
Nancy Fouad Carey
Attorney
Project Delivery Methods
• Design-Build
• Job Order Contracting
• Integrated Project Delivery
• Multi-Prime
• Design-Bid-Build
• Construction Management at Agency
• Construction Management at-Risk
Public Works
• Any project performed on public property with public funds
• the construction, installation, repair, renovation, or
maintenance of public buildings, structures, sewers,
waterworks, roads,…bridges, docks, underpasses, and
viaducts
• as well as any other improvement to be constructed,
installed, repaired, renovated, or maintained on public
property
• and to be paid, in whole or in part, with public funds
Ala. Code § 39-2-1
Public Works
• Public works in excess of $50,000 must be advertised for
sealed bids.
• Projects cannot be divided into parts smaller than $50,000 for
the purpose of avoiding the competitive bid requirements.
• Exempt
• Professional Services
• Sole Source Contracts
• Emergencies
Ala. Code § 39-2-2
Project Delivery Methods for Public Works
• Design-Bid-Build
• Construction Management at Agency
• Construction Management at-Risk
Design-Bid-Build
Owner
Architect/
Engineer
General
Contractor
Subcontractor
Subcontractor
Subcontractor
Design-Bid-Build
Design Phase
• Owner enters a contract with an engineer to completely design
the project
Bidding Phase
• Plans are put out for bidding
Construction Phase
• Owner enters a second contract with the lowest responsive and
responsible bidder to construct the project
Design-Bid-Build
Planning
Design
Design Team
Bid
Construction
Contractor
Occupancy
Design-Bid-Build
Advantages
• Most familiar system
• Competitive bidding
• Most suitable for projects with clear boundaries and
for those with adequate time to prepare thorough
documents and to execute the construction
Design-Bid-Build
Drawbacks
• Contractor is not involved in design
• A slow delivery process – design must be 100%
complete before bidding starts
• An initial low bid does not necessarily result in final best
value
• Owner assumes risks of errors
• History of litigation
Construction Management
• Construction Management at Agency
• Construction Management at-Risk
Construction Management
• CM assists owner with any phase
• Construction Manager oversees:
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Scheduling
Cost control
Constructability
Project management
Building technology
The bidding on or negotiating of construction contracts
Construction
• CM’s Role:
• Consultant (CM at Agency)
• Contractor (CM at-Risk)
Construction Management at Agency
Owner
Architect/
Engineer
Trade
Contractor
Trade
Contractor
Construction
Manager
Trade
Contractor
Trade
Contractor
Trade
Contractor
Construction Management at Agency
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Assists and advises awarding authority:
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During bidding phase
Scheduling and coordinating construction
Observing work and managing construction
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Does not accept any risk
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Does not perform construction services
CM at Agency - Exempt
Professional Services Exempt:
• Contracts with persons who perform only architectural,
engineering, construction management, program
management, or program management services.
• Cannot engage in actual construction, repair,
renovation, or maintenance of the public works with their
own forces, by contract, subcontract, purchase order,
lease or otherwise.
Ala. Code § 39-2-2(d)
Construction Management at Agency
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Advantages:
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Can reduce awarding authority’s staff
CM may have more expertise
Reviews design for constructability
Drawbacks:
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Does not accept any risk
Owner manages the contracts
No single, guaranteed price
Unnecessary cost possible
Construction Management at-Risk
Owner
Architect/
Engineer
CMAR
Subcontractor
Subcontractor
Subcontractor
Construction Management at-Risk
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Owner holds a contract with the CM and a separate
contract with the designer
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CM at-Risk:
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Supplies preconstruction services
Holds the subcontracts (competitively bid)
Takes responsibility for the performance of the work
Guarantees the construction costs and schedule
Construction Management at-Risk
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Design Phase
• Schematic Documents
• Design Documents
• Construction Documents
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Bidding Phase
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Construction Phase
Planning
Design
Construction
Design Team
CM at-Risk
Occupancy
…
Construction Management at-Risk
Design Phase - Schematic Documents
CM at-Risk:
• Updates budget
• Outlines specification
• Evaluates materials and construction systems
• Updates schedule
• Value Analysis Report
Construction Management at-Risk
Design Phase - Design Documents
CM at-Risk:
• Updates budget, specifications, schedule, Value Analysis
Report
• Guarantees the price and assumes the risk for the project’s
cost by providing the Guaranteed Maximum Price
• Assumption that the project’s scope, assumptions, and
drawings will not materially change
• If costs exceed this price and if the client has not made
any changes, CM at-Risk is responsible for costs
exceeding GMP
Construction Management at-Risk
Design Phase - Construction Documents
• Designer’s instructions to constructor
• Important phase – where CM at-Risk is tested
• This phase’s estimate should reflect the design
documents segment of the design phase
• Guaranteed Maximum Price is finalized
Selecting the CM at-Risk
• Best if CM at-Risk selected early
Selected using either:
• Qualifications-Based Selection = Qualifications
• Best Value Selection = Construction Cost + Qualifications
Selecting the CM at-Risk
Qualifications-Based Selection
• Qualifications may include:
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Experience
Personnel
Performance
Project issues and solutions
Management, budget, schedule, safety
• Qualifications are evaluated in accordance with criteria and
weighting approved by Owner
Construction Management at-Risk
Advantages
• Strengthens coordination between the A/E and CM at-Risk
• Increases the speed of the project
• Transparency is enhanced because all costs in the open
• Owner hires CM at-Risk based on qualifications
• CM at-Risk, A/E and Owner all collaborate
• Reduces potential for errors and omissions
Construction Management at-Risk
Legislation
• Some states have authorized CM at-Risk for only certain state
agencies
• CM at-Risk is competitively bid in some states
• Some states only allow CM at-Risk for certain projects
• Specific requirements for Selection Team – Arizona:
• Minimum of 3, not more than 7
• One licensed contractor, Senior Management
• One registered or architect or engineer
• Differences also arise between states over whether the CM can
perform part of the work itself and, if so, how much and under what
conditions.
Summary
Project delivery method drives:
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Project cost
Quality of design
Construction
Long-term maintenance
Project completion date
CM at-Risk involves:
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Early contractor participation
Integration of design and construction teams
Reduced project duration
Reduced construction costs
Thank You!
Questions?
Nancy Fouad Carey
[email protected]
(205) 458-5425
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