FAQs - CM AT RISK OR CM AGENCY

Describe the difference between CM at Risk and CM Agency.  Which do you prefer and why?
“At risk” CM is a delivery method that entails a commitment by the construction manager to deliver the project within a GMP. In other words, the CM is “at risk” to complete the project for a GMP and within an agreed upon schedule.  In this delivery process, the owner knows the cost of the project before construction begins.

The construction manager acts as a consultant to the owner in the pre-construction and design phases and uses a general contractor during the construction phase. When a construction manager is bound to a GMP, the most fundamental character of the relationship is changed.  The CM works to serve the best interests of the owner while protecting his/her interests to deliver the project for a guaranteed price and schedule.   The Hewlett Spencer process is closely related to the CM “at risk” method but adds features that go beyond a typical CM at risk, as the County has one point of contact and we take on all the risk associated with the building program as we act on behalf of the owner.  

“CM Agency” is a fee-based service in which the construction manager is responsible exclusively to the owner and acts in the owner’s interest. The CM offers advice on project delivery but has no financial guarantee of responsibility to the owner.  Using a CM Agency delivery, the owner holds the subcontracts and assumes the risks of delivery including cost and schedule.  

In short, we prefer a CM “At Risk” delivery system.  From our experience an approach that guarantees delivery for a set cost is preferred over a delivery system where an agent is only providing management advice.  Depending on the size and complexity of a project, CM Agency basically duplicates services already being provided by the general contractor and architect/engineer.  The CM Agent has no financial stake in the project and therefore no incentive to deliver the project in the most cost efficient manner. The CM Agent also does not hold subcontracts. This responsibility then falls to the owner and increases the administrative burden required to complete the assignment