Construction Financial Glossary

Construction Management at Risk (CMAR) Definition

Construction Management at Risk (CMAR) is a contract where the Construction Manager agrees to a Guaranteed Maximum Price (GMP) and assumes responsibility for cost overruns beyond that price. CMAR is typically used in complex projects that require close oversight.

How CMAR Contracts Manage Risk

In CMAR contracts, the construction manager provides a GMP, ensuring that the project will not exceed this cost unless there are significant scope changes. The construction manager assumes the risk of any cost overruns, which incentivises them to control project costs effectively. This type of contract is often used when the project requires a high level of oversight due to its complexity.

Best Practices for Managing CMAR Contracts

The construction manager should conduct detailed cost estimation and closely monitor project expenses to ensure the project stays within the GMP. Regular communication with the Client is essential to avoid disputes over cost increases. Detailed record-keeping is important in case any changes to the scope need to be made during the project.

Related Terms: Guaranteed Maximum Price (GMP) Contract

FAQs

What happens if the project exceeds the Guaranteed Maximum Price in a CMAR contract?

A: The Construction Manager is responsible for covering any costs beyond the GMP, which protects the Client from budget overruns.

Why is CMAR used in complex projects?

A: CMAR provides a high level of cost control and oversight, making it ideal for complex projects where cost overruns are a risk.

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