Construction Manager At-Risk Format Provides Financial Safety Net for Owners

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Nabholz’ construction work on some of the state’s most recognizable destinations — Wonders of Wildlife, Bass Pro Shops, Ozark Mill and Big Cedar Lodge — helped the firm earn a reputation as a reliable, competent builder in Missouri. So, in 2016, when Missouri passed legislation permitting public entities to use the Construction Manager At-Risk (CMAR) delivery method, Nabholz jumped right into the state’s K-12 market.

Understanding the benefits of CMAR starts with an understanding of construction delivery methods. Every Nabholz job, whether a large building or small electrical upgrade, begins with a crucial decision – determining which project delivery method to use. With no shortage of methods, choosing the right one can seem like a daunting task, but it’s a task that could pay dividends in the form of cost savings, lower risk and increased value.  

The most well-known method is hard bid, also known as design-bid-build. It’s a straightforward process. First, the owner hires a designer. The designer draws up a set of plans and gets the owner's final approval. Next, the owner bids the work out to a few general contractors (GCs) and hires the lowest bidder, regardless of experience or qualifications. The GC then begins work, hiring subcontractors as needed, also based on lowest bid. The apparent advantage here is potential cost savings. Unfortunately, a lack of transparency means owners might never see those bids and never know whether they’ve saved money or overpaid by the end of the project.

Relatively new to the industry, the Construction Manager-at-Risk (CMAR) format addresses those problems. Under CMAR, the owner hires the construction manager (CM) based on qualifications, with a negotiated fee. The CM collaborates with the owner and architect during the design phase to help shorten the schedule, reduce potential change orders, and build more value into the project. Unlike hard bid, CMAR is an open-book delivery system, offering the owner access to all project cost information. What really sets this method apart, and makes it a popular choice among owners, is the reduced risk. 

Every construction project involves some amount of financial risk. With CMAR, as the name implies, the Construction Manager, not the owner, assumes that risk. For example, under CMAR, the CM holds the subcontracts, meaning that if a subcontractor fails halfway through the project, the CM bears the responsibility (and any added costs) of finding another sub to finish the work. This motivates contractors to award their subcontracts based on overall value – prioritizing schedule and quality alongside price.

Further reducing the owner’s financial risk, CMAR requires the construction manager to provide the owner with a guaranteed maximum price, which ensures that any cost overruns come out of the CM's pocket — not the owner’s — making it even more appealing with the current threat inflation poses. In addition, the CM is bound to the construction schedule and any additional costs for overtime or expedited materials needed to meet that schedule belong to the construction manager, not the owner. 

By the time the State of Missouri approved Construction Manager-at-Risk for public projects, Nabholz already had extensive experience delivering CMAR projects to K-12 clients. With this experience, Nabholz successfully completed Missouri’s first public school CMAR building project at the School of the Osage in Osage Beach, Missouri. Since then, Nabholz has completed work for Springfield, Jefferson City, School of the Osage, and other public school districts throughout Missouri. 

It isn’t just Nabholz’ past CMAR experience that primes the firm to deliver projects successfully. Additionally, this model aligns with Nabholz’ way of doing business. If the construction manager doesn’t perform the work within the set budget or timeline, or they do not select the most qualified subcontractor, they can lose money on projects. That’s already how Nabholz operates — you do what you say when you said you’d do it. 

Founded as a small construction company in 1949, Nabholz is now a team of over 1,200 industry-leading professionals located across seven states in the central United States. Through the decades, the firm has grown into a national multi-service contractor offering a full range of construction, industrial, excavation, energy conservation, and environmental hazard services. This diverse range of services allows Nabholz to be customers’ single-source provider for all construction and specialty installation needs. The company operates today with a simple purpose in mind: to grow its people, serve its clients, and build its communities. 

Nabholz Construction

Street Address:

2223 W Sunset Street

Springfield, MO 65807

Phone: 417.450.6000

Web Address: nabholz.com

Top Executives:

Gregg Scholtens, EVP of Operations;

Michael Parker, President Central Region;

Greg Williams, CEO; Bryan Bruich, CFO;

Brad Hegeman, COO; Greg Fogle, COO;

Bay Mourer, Business Development Officer

Number of Employees: 1,186

Year Founded: 1949

Product or Service: Construction, Civil, Industrial, Environmental, & Specialty Service