Construction Management at Risk: Who Is Really at Risk?

• Pages: 36-61
• Date: 01 October 2025
• Published date: 01 October 2025
• Author: Chantal Fink Mehill, Esq.,Christopher Payne
• Subject Matter: Derecho Público y Administrativo

Published in The Construction Lawyer Volume 44, Number 4, ©2025 by the American Bar Association. Reproduced with permission.

All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in

an electronic database or retrieval system without the express written consent of the American Bar Association.

Forum on Construction Law The Construction Lawyer Fall 2025

36

Construction Management at Risk: Who Is Really at

Risk?

Chantal Fink Mehill, Esq. and Christopher Payne, PE, CCM

Chantal Fink Mehill, Esq. is a partner with UB Greensfelder LLP in St. Louis, MO.

Christopher Payne, PE, CCM is president and chief executive officer at MBP in Vienna, VA

Presented at the 2025 Annual Program, April 23-25, 2025

Introduction

In recent years, alternative project delivery methods have become increasingly prominent in construction

contracts within the United States. In particular, the “construction manager at risk” delivery method has

increased in popularity, likely due to this approach’s ability to streamline design and construction. However,

with the rise of this nontraditional contracting method, new and unique legal questions and considerations

have arisen as the legal landscape evolves to reect the nuances of this arrangement. For example, while

alternative delivery approaches, such as construction management at risk, always have been allowed in private

construction contracts, the availability of these arrangements in public contracts can vary widely. Further,

the manner in which construction management at risk aects the obligations of the parties and the standards

applicable to performance may not be well understood by both parties and practitioners, which can lead to

disputes.

Given the recent growth of this delivery method, construction law practitioners should familiarize themselves

with the laws and regulations involving construction management at risk arrangements in their jurisdiction(s).

This article aims to provide an overview of the construction manager at risk project delivery method and some

of the key considerations of which practitioners and parties should be aware.

Overview of the Construction Manager at Risk Project Delivery Method

What Is a Construction Manager at Risk?

Construction manager at risk (CMAR) is a delivery approach wherein the owner hires a construction

manager to participate in a project from design through closeout. While the original concept of construction

management involved the construction manager acting as the owner’s agent, a construction manager “at

risk” enters into contracts directly with the contractors and/or the subcontractors that perform the work.

Additionally, a CMAR contract is generally, though not always, subject to a guaranteed maximum price

(GMP). Under such an arrangement, the CMAR bears much of the project’s risk because the CMAR is directly

liable to execute construction and may be responsible for paying the dierence if its costs exceed the agreed-

up on G MP.

This arrangement can be attractive to both owners and construction managers. For owners, a construction

manager’s involvement typically results in an improved design, an overall reduction in changes as the project

progresses, faster and more efficient construction, and, at times, a reduction in disputes. For construction

managers, the arrangement is attractive because it presents an opportunity for the CMAR to build a

Published in The Construction Lawyer Volume 44, Number 4, ©2025 by the American Bar Association. Reproduced with permission.

All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in

an electronic database or retrieval system without the express written consent of the American Bar Association.

Forum on Construction Law The Construction Lawyer Fall 2025

37

relationship of trust and confidence with the owner, while also allowing the CMAR to influence design, which

can lead to overall cost savings and increased profitability.

Nevertheless, in the context of public projects, CMAR contracts have been the subject of much debate.

Although the authors of this article have not encountered any state that restricts or otherwise regulates CMAR

contracts between private parties, there is wide variation among the 50 states in their approach to CMAR

contracts in the context of public projects. Many states, for example, expressly authorize CMAR contracts as a

project delivery method; however, a significant cohort restrict, or even outright prohibit, the arrangement. The

varying approaches taken by jurisdictions across the country are explored below.

Qualifications for Construction Managers at Risk on Public Projects

Before delving into the various jurisdictional approaches to CMAR contracts, it is important to recognize at

the outset that many of the states that allow the use of CMAR contracts have taken steps to implement certain

qualication requirements for CMARs on public projects. For example, to qualify to enter into construction

contracts with a public body in Nevada, a CMAR must (1) not have been found liable for breach of contract

during the preceding ve years, (2) not have entered into a contract with a public body to act as a construction

manager as agent during the preceding four years, and (3) be licensed as a contractor under state law, among

other requirements.1

The Nevada qualifications are just one example of requirements a state may impose for a contractor entity to

even qualify as a CMAR in a given jurisdiction. ualification requirements vary significantly from state to

state. Therefore, when pursuing work as a CMAR on a public project, the contractor (and its attorney or other

legal advisor) must carefully review threshold qualification requirements that apply in the state.

Various State Approaches to CMAR Contracts on Public Projects

Broadly and Expressly Authorized

As of 2024, approximately half of the 50 states broadly and expressly permit public entities to enter into

CMAR contracts. In these states, CMAR contracts are expressly authorized by statute, and there are no major

limitations on the types of public projects for which the CMAR arrangement can be utilized. However, even

within this category, there is wide variation among the states with respect to how they authorize CMAR

contracts. Some states simply include “construction managers at risk” within a statutory list of approved

project delivery methods for public contracts.2 Other states have enacted some form of “alternative project

delivery” legislation, allowing for a myriad of “alternative” project delivery methods, such as CMAR contracts.3

Importantly, in many of these states, the award of a CMAR contract may still be subject to a number of

procedural requirements that must be followed, such as a determination that the use of a CMAR is appropriate

under the circumstances,4 a competitive bidding process,5 or other procedural requirements. In other states that

broadly permit the arrangement, there even may be dierent statutes authorizing the use of CMAR contracts

by state and local governments, with diering requirements at each level.6 Accordingly, it is important that

practitioners carefully review state law to determine all statutory and procedural requirements that may apply

to a CMAR contract, even where the jurisdiction expressly authorizes the contractual arrangement.

Conditionally Allowed

A minority of states expressly allow public entities to enter into CMAR contracts, but only in limited

circumstances. e most common categorical limitations are (1) statutes that only allow CMAR contracts on

projects that exceed a certain size threshold and (2) statutes restricting CMAR contracts to the construction of

certain types of buildings.