What is the typical reimbursement method when using a CM at Risk Project delivery method?

In the Construction Manager at Risk (CM at Risk) project delivery method, the typical reimbursement approach is through a Guaranteed Maximum Price (GMP). This method establishes an upper limit on the project's cost, providing financial protection for the owner. It assures that the owner will not pay more than the agreed-upon maximum, fostering a sense of security. At the same time, it incentivizes the construction manager to control costs and manage the project efficiently to deliver within, or ideally below, the GMP.

The GMP arrangement allows for a collaborative working environment where the CM participates early in the design process, helping to refine scope and budget according to the project’s needs. This early involvement enables better forecasting and discussion of potential cost-saving measures.

In contrast, methods like cost-plus reimbursement can lead to variable costs with no capped expenses, while fixed price lacks flexibility when it comes to changes or uncertainties that may arise during the project. Hourly billing does not provide a clear budget for the entire project and can lead to escalating costs without a cap. Therefore, GMP is the method that best balances risk and cost control in this project delivery approach.