There’s been a lot of discussion in the North Carolina public construction market regarding the Construction Management at Risk (CMAR) delivery method and it’s proper use. I recently had a good friend from the construction industry say that he had heard I was against CMAR.
That is simply not true. I have completed more than a billion dollars worth of public CMAR projects and am proud of ever one of them.
Construction Management at Risk is a very effective delivery method for large complex projects that require multiple years of design. There are many reasons CMAR is the right choice for these projects: preconstruction services, pre-qualification of subcontractors, reduced risk for the team members, less litigation, better schedule adherence, higher quality and better budget control. Now I am not saying every CMAR job will realize these possible benefits, just that the process lends itself to the opportunity for these things to happen. There are many local examples where this delivery method has been used successfully, including the Wake County Justice Center, new Wake County Jail and the Jim Hunt Library at North Carolina State University just to name a few.
Of course, I am biased toward the Raleigh Convention Center because it is a project I worked on personally. This project was a total success no matter what measurement is used. But, let’s focus on the cost benefit:
The City of Raleigh was able to start using the facility two years ahead of schedule compared to a traditional design bid build (Lump Sum Bid) delivery method. These two years of revenues far out weigh any savings that would have been realized using Lump Sum Bid.
The reason North Carolina-headquartered contractors are upset about the use of the CMAR delivery method is because public owners are using CMAR for projects that are too small for any justifiable benefits to be offset by the additional cost incurred using this delivery method.
The definition of what is too small is arguable and depends on many different factors such as the type of project, size, designer, owner, etc. A good rule of thumb is to say that if a project is over $35 million, CMAR is probably your best choice; if the project is between $20 and $35 million it requires close evaluation and if it’s less than $20 million, then sum bid will be your best option.
Why is this an important issue? Tax dollars. If we use CMAR on projects that are too small we are paying too much for our public projects.
And finally, for those who believe I have a stake in whether a public Owner decides to use CMAR on small projects ($5 million to $35 million), Muter Construction has not been affected in any way by these decisions. As a matter of fact, I can’t think of a single project that we would have bid if the job would have been bid in lieu of the CMAR delivery method. So, I am as unbiased as I can be. All I want is for the process to be honest, transparent and save tax dollars. If a project costs more but an owner feels there are advantages to using CMAR just tell the taxpayers. It may make perfect sense, but don’t try to justify that it cost less.
If you need more help deciding which method to use feel free to call me.