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Business
& Labor
Owners' Risk-Shifting Boosts CM-at-Risk Firms
(enr.com
- 6/17/02 issue)
By Gary
J. Tulacz
Looking at the numbers, ENR's Top 100
CM-at-Risk firms had the best year in 2001, with overall revenue
rising 10.8% over 2000's mark, and 12.8% domestically. This
has been a long-term trend as risk-shifting by owners, coupled
with the need for closer management of the overall project,
has placed increasing emphasis on design-build and CM at-risk.
Part of the surge in CM at-risk even beyond that of the
much-touted rise in design-build may be attributed to the
move in the public sector toward alternate project delivery.
"Private clients have always demanded contractor intervention
from the start of the project," says Chuck Cianciaruso,
senior vice president for business development at J.E. Dunn
Group. "But now there is an unbelievable amount of work
in the public sector where the demands are the same."
He says that Dunn had a big year in 2001 but, judging from
the numbers in the first quarter, 2002 will be even bigger.
In many states, enabling legislation has gone a long way to
boost CM at-risk. "CM at-risk is being embraced in the
Southeast and the Southwest," says Bruce D'Agostino,
executive director of the Construction Management Association
of America. He notes that three Atlanta-area schools systems–in
the city of Atlanta, Fulton County and Gwinnett County–have
about $2 billion worth of work under way or planned, and all
of it is CM at-risk.
But CM at-risk in the public sector isn't limited to the
big, sophisticated agencies. "On the at-risk side, we
are seeing a lot of smaller cities going to negotiated CM
at-risk," says Jeff Hoopes, executive vice president
of Swinerton. He is seeing new opportunities for CM at-risk
in Arizona now that the state has authorized alternate project
delivery in the public sector. "Most of the public projects
now are going CM/general contracting or CM at-risk,"
Hoopes says.
In some states, CM at-risk may be the only choice for alternate
project delivery. "There's a handful of states where
it is difficult to use design-build for most public projects,"
says Jeffrey Beard, CEO of the Design-Build Institute of America.
"Some state procurement systems simply can't get beyond
the low-bid mentality."
DBIA is pushing for equal footing for delivery systems.
As part of this push, DBIA and CMAA plan to meet with the
National Association of County Executives in July to get increased
exposure for CM and design-build, says Beard.
Beard also says that the surge in CM at-risk is the first
step for many owners toward design-build. "Some owners
aren't willing to take the plunge right away," he says.
"CM at-risk is a way of getting the contractor on board
at an early stage. It's a way to get their toe in the water
on design-build."
But not everyone is convinced that design-build is always
appropriate. While Swinerton provides design-build, CM at-risk,
agency CM and general contracting services, Hoopes sees CM
as the best bet for the really complicated projects. "For
the most complicated projects, it is probably better to bring
in a CM firm early to work through the value engineering and
design documents," he says. "Design-build is a tough
choice for the really complicated jobs, but good where more
standardized designs are involved."
The big concern is to educate owners about CM. "Not
everyone can do CM at-risk," D'Agostino says. "Unless
you get up-front consulting services, all you are getting
is general contracting." That's why he is pleased that
owners make up the fastest growing membership group within
CMAA.
But much of the growth in CM at-risk is because particular
markets that prefer it are particularly hot at this time.
"Some of our traditional clients, like colleges, universities
and hospitals, still want to go with CM at-risk," says
Bob Fortune, vice president of BBL Construction Services.
"Many of these clients have long-term relationships with
particular architects and don't want to contract with us to
supply the design," he says.
It often is this client insistence that will move a project
away from design-build to CM at-risk. "Our customers
typically prefer a single-source approach," says John
McKenzie, vice president of construction for design-build
specialist Opus Northwest. "But occasionally, a client
will come in with an existing relationship with an architect,
and go along with that," he says.
Some construction firms prefer to stick with CM at-risk,
rather than going with design-build. "We are not seeing
as much design-build as we thought we would," says Allen
Rudolph, CEO of Rudolph & Sletten. "However, we are
seeing a lot of design-assist, bringing the electrical and
mechanical contractors in early in the process. We prefer
the three-legged stool: the owner, the designer and the contractor.
There may sometimes be bumps in the road, but projects work
best where the owner is actively involved in the process."
The construction process has evolved over the years but
the ultimate goal has not. "I've been in the business
for 30 years," says Fortune of BBL. "When I look
at a building, I am surprised to see that not much has really
changed in the building itself. What has changed is the project
delivery systems. The important thing in the whole process
is that owners need to know they are getting value, no matter
what the delivery system. That's what it is all about."
CLICK HERE FOR
2002 TOP 100 DESIGN-BUILD FIRMS LIST
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TOP 100 DESIGN-BUILD FIRMS
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TOP 100 CM-FOR-FEE FIRMS
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TOP 100 CM-AT-RISK FIRMS
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