California Construction Manager at Risk

The Construction Manager at Risk (CMAR) delivery method positions a construction management firm as both preconstruction advisor and general contractor, accepting contractual responsibility for delivering a project within a Guaranteed Maximum Price. This page covers the definition of CMAR under California law, how the contractual mechanism operates, the scenarios in which public and private owners deploy it, and the boundaries that distinguish it from alternative delivery methods. Understanding these distinctions matters because California statute governs which project types may use CMAR and under what competitive selection requirements.

Definition and scope

Construction Manager at Risk is a project delivery method in which an owner contracts with a construction manager (CM) who holds a single contract covering both preconstruction services and construction execution. The CM's defining obligation is the Guaranteed Maximum Price (GMP), a contractual ceiling beyond which cost overruns are absorbed by the CM rather than passed to the owner—provided the scope has not changed. Savings below the GMP may be shared under a split-savings clause or retained by the owner, depending on negotiated terms.

In California, CMAR authority for public owners is not universally available. The California Legislature has granted CMAR authority to specific public entities through enabling statutes. The University of California and California State University systems, for example, operate under Board of Regents and Trustee authority that permits alternative delivery. K–12 school districts gained broader alternative delivery authority through Assembly Bill 566 (2019) (California Legislative Information, AB 566), which allows districts to use lease-leaseback, design-build, and CM at Risk. The California Department of General Services oversees capital outlay projects under the State Administrative Manual and Public Contract Code, which governs procurement rules for state-funded construction broadly (California Public Contract Code).

Scope of this page: Coverage applies to California-specific statutory frameworks, licensing requirements under the Contractors State License Board (CSLB), and project delivery rules as they apply within California jurisdiction. Federal procurement rules (FAR/DFARS), out-of-state public contracting statutes, and purely private international contracts fall outside this scope. Projects on federal land within California may trigger federal contracting law rather than California Public Contract Code.

For foundational context on how California structures construction projects generally, see How California Construction Works: Conceptual Overview.

How it works

CMAR delivery proceeds through two contractually distinct but sequentially linked phases:

  1. Preconstruction Phase. The CM is engaged early—often during schematic design or design development—and provides constructability reviews, value engineering, schedule analysis, phasing recommendations, and subcontractor market studies. The CM's fee during this phase is typically a fixed preconstruction services fee. No GMP exists yet.

  2. GMP Establishment. At a defined design milestone (commonly 60–90% construction documents), the CM submits a GMP proposal. The owner may accept, negotiate, or reject the GMP. If rejected, the contract may allow the owner to rebid the work competitively. The GMP must itemize the cost of work, the CM's general conditions, contingency allowances, and the CM's fee.

  3. Construction Phase. Upon GMP acceptance, the CM converts to the role of general contractor. Subcontracts are held by the CM. The CM self-performs work only within the limits of its CSLB license classification and any applicable self-performance caps. California Public Contract Code §4100 et seq. (the Subletting and Subcontracting Fair Practices Act) governs subcontractor listing obligations on public projects, requiring the CM to list subcontractors holding more than 0.5% of the GMP at bid time.

  4. Closeout. GMP reconciliation occurs at substantial completion. Any unused contingency below the GMP is distributed per the contract's savings-sharing formula. Lien releases, as-built documentation, and certificate of occupancy from the local Authority Having Jurisdiction (AHJ) close the contract administratively. See California Construction Project Closeout for a full treatment of this phase.

The CM must hold an active California contractor's license in the appropriate classification—typically Class B (General Building) for vertical construction or Class A (General Engineering) for infrastructure. CSLB licensing requirements are addressed in detail at California Construction Licensing Requirements.

Safety obligations under CMAR mirror those of a general contractor. Cal/OSHA Title 8 regulations apply in full; the CM is the controlling employer on the jobsite and carries Injury and Illness Prevention Program (IIPP) responsibility under California Code of Regulations Title 8, §3203 (Cal/OSHA, CCR Title 8).

Common scenarios

Higher education and healthcare. UC and CSU campuses regularly use CMAR for laboratory, research, and clinical facility projects where design complexity and phased occupancy make early CM involvement valuable. The UC system's Capital Programs office publishes project delivery selection criteria that weigh schedule compression and cost certainty.

K–12 school construction. Following AB 566, school districts in Los Angeles, San Diego, and Fresno have used CMAR for seismic retrofit and new classroom construction funded through general obligation bonds. The Division of the State Architect (DSA) retains plan review and inspection authority over all K–12 and community college projects regardless of delivery method, under California Education Code (DSA, California Department of General Services).

Large private commercial projects. Private owners—developers, hospital systems, industrial owner-operators—deploy CMAR without the statutory constraints applicable to public entities. A developer constructing a 400,000-square-foot mixed-use building may use CMAR purely by negotiated contract, subject only to California Business and Professions Code licensing rules and standard contract law.

The regulatory context for California construction covers the agency landscape—DSA, CSLB, Cal/OSHA, and local AHJs—that governs CMAR projects across all sectors.

Decision boundaries

CMAR vs. Design-Build. In design-build, a single entity holds both the design and construction contracts, transferring design liability to the contractor. In CMAR, the owner retains the design contract with the architect of record; the CM provides construction services only. Design liability remains with the architect under California Business and Professions Code §5500 et seq. CMAR is preferred when owners want design control and architect continuity; design-build is preferred when schedule compression and single-point responsibility outweigh owner design oversight. See California Design-Build Delivery Method for a direct comparison.

CMAR vs. traditional Design-Bid-Build. In Design-Bid-Build, competitive low-bid selection under Public Contract Code §20128 governs most public projects. CMAR replaces low-bid with qualifications-based or best-value selection for the CM role, which requires specific statutory authority for public owners. The tradeoff: CMAR offers earlier constructability input and GMP cost certainty before 100% documents; Design-Bid-Build offers maximum price competition after complete design.

When CMAR is not appropriate. Projects with straightforward, well-defined scope, no phasing complexity, and standard specifications derive limited value from preconstruction services. The added CM fee—typically 3–6% of construction cost—may not be offset by savings on routine projects. Additionally, public entities lacking explicit statutory CMAR authority cannot use this method regardless of project complexity; the default remains competitively bid general contracting under the Public Contract Code.

For projects where the California Public Works Construction framework applies, confirming enabling authority before selecting CMAR is a threshold legal requirement, not a procedural preference. The broader California construction project landscape, including the index of all delivery and regulatory topics, is accessible at the California Commercial Authority homepage.

References

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