Legislation Alters the Way Contractors Procure Public Business

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In 2016, the Governor of Missouri signed House Bill 2376 allowing political subdivisions to utilize the Construction Management At-Risk (CMAR) delivery method for public works projects. The CMAR delivery method has changed the way contractors procure work from publicly held entities like cities, counties, universities and public schools. CMAR is an alternative delivery method to the traditional design-bid-build approach that most people are familiar with. “But the construction environment has started to change,” says Gregg Scholtens executive vice president of Nabholz Construction.

The CMAR delivery method is a multi-step selection process where factors like qualifications and team experience carry as much value as the fee. Owners publicly advertise a Request for Qualifications (RFQ). Once the owner has reviewed the qualifications, they narrow down their selection to 2-5 firms that they then review fee proposals from and then ultimately interview the CMAR teams. This process allows a public owner to be more selective about who they work with, “They aren’t just stuck with the low bidder who may not be qualified to build the project,” says Scholtens.

In most cases the owner selects the CMAR early in the design phase. “One of the major values that CMAR brings to the table is in the pre-construction services,” says Scholtens. “The CMAR works collaboratively with the design firms to ensure that the owner’s budget and design align.” That means there are no surprises on bid day. The owner gets the program space they need for the budget that they have. “That’s huge, especially in the public sector,” says Scholtens. “The public clients that we work with are very diligent about protecting their constituents tax dollars.”

According to Scholtens, another value of the CMAR process is that it’s completely transparent. “It’s all open book,” he says. “That’s a great benefit for public entities. They know what’s going on every step of the way.” With traditional design-bid-build the owner would only see the total bid from a general contractor and there was no cost breakdown. “With CMAR they see every subcontract bid and supplier quote.” This way the owner can see the value that they are getting and know that their budget is being handled appropriately. “Being transparent with your clients is just good business,” says Scholtens.

Being “at risk” means the CMAR takes the risk for the scope, price, schedule, quality, insurance, subcontractors and bonds. This is very similar to the traditional design-bid-build approach but with one major difference, “The owner gets to keep the savings,” says Scholtens. All of this is done by establishing a Guaranteed Maximum Price (GMP). The GMP is the Construction Managers promise to complete the scope of the project on time and in budget – if scope and schedule are compromised then the CMAR is at risk for any cost over the GMP. But if the project is delivered on time and under the GMP then the owner keeps any savings.

“CMAR is a collaborative, team approach that helps eliminate surprises for the owner and drives value into the project,” says Scholtens.

Nabholz
Street Address:
2223 W Sunset Street
Springfield, MO 65807
Phone: 417.450.6000
Web Address:
https://www.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
Year Founded: 1949
Number of Employees: 1,177
Product or Service:
Construction, Civil, Industrial, Environmental, & Specialty Service

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