Managing the Risk in CMAR Contracts: Guidance for Owners, Contractors and Subs

The CMAR project delivery method is hailed as an innovative and cost-effective alternative to the traditional design-bid-build process. Its benefits often include reduced project delivery times and increased cost control and budget accountability, among others. Once engaged, a construction manager’s scope of work is typically split between the design phase and construction phase of the project, allowing the construction manager to contribute early to the project’s design direction, value engineering, schedule development, and overall constructability.

Counsel structuring CMAR agreements--whether owner-facing or construction manager-facing--must adequately address the risks inherent in such an early and deep engagement. Unlike design-build arrangements, in CMAR agreements exclusive control of the project’s plans and specifications is not vested in the owner and design team, potentially giving rise to liability for warranty and design-defect claims under the Spearin doctrine.

The fluidity of responsibility between the owner, construction manager, design team, and subcontractors mandates a higher level of scrutiny in structuring indemnity provisions, insurance requirements, and their interplay with tried-and-true methods of project management to ensure the risks associated with each party’s role is adequately mitigated.

Listen as our expert panel provides critical insight into structuring risk provisions in CMAR agreements, including best practices in negotiating and drafting terms that equitably allocate risk as well as limit and provide adequate backstops for potential liability.

1. Overview of construction manager at risk project delivery
   1. Parties
   2. Scopes of work
   3. Benefits
   4. Disadvantages
2. Risk factors
   1. Owner
   2. Construction manager
   3. Design team
      1. Architect
      2. Engineer
3. Risk allocation provisions
   1. Key terms
   2. Interplay with other contract provisions

The panel will review these and other key issues:

• What are the critical risk allocation provisions to include in CMAR agreements?
• How do risk factors differ in CMAR arrangements compared to other project delivery methods?
• How do the risks associated with CMAR arrangements differ between public and private sector projects?