What is a major difference between a CM agency and a CM at risk?

What is a major difference between a CM agency and a CM at risk?

• A. Manages construction on the owner's behalf
• B. Has a contract with the designer
• C. Provides a lump sum price for construction services
• D. Caps the construction costs the owner is required to pay

Answer: (D)

The choice that distinguishes a Construction Manager (CM) at risk from a Construction Manager (CM) agency is the aspect of cost management and guarantee. A CM at risk assumes the responsibility for the cost of construction and typically provides a guaranteed maximum price (GMP) to the owner. This means that if the project costs exceed this maximum price, the CM at risk is responsible for covering those additional costs, thereby capping the construction costs that the owner has to pay. In contrast, a CM agency model does not take on this risk; their primary role is to act as an agent for the owner and manage the project without a financial stake in the construction costs. In this scenario, the owner remains responsible for any cost overruns. Therefore, the defining characteristic of a CM at risk is the financial commitment and risk assumption regarding the project's total costs, making the ability to cap costs a key differentiator.

The choice that distinguishes a Construction Manager (CM) at risk from a Construction Manager (CM) agency is the aspect of cost management and guarantee. A CM at risk assumes the responsibility for the cost of construction and typically provides a guaranteed maximum price (GMP) to the owner. This means that if the project costs exceed this maximum price, the CM at risk is responsible for covering those additional costs, thereby capping the construction costs that the owner has to pay.

In contrast, a CM agency model does not take on this risk; their primary role is to act as an agent for the owner and manage the project without a financial stake in the construction costs. In this scenario, the owner remains responsible for any cost overruns. Therefore, the defining characteristic of a CM at risk is the financial commitment and risk assumption regarding the project's total costs, making the ability to cap costs a key differentiator.