The massive City Springs project has been under construction for months—but the final blueprints were just handed over on Jan. 25. The city of Sandy Springs has paid the contractor millions of dollars—but the project’s budget won’t be set until later this month.
This construction method, known in industry jargon as “CM [construction manager] at risk,” can sound strange to laypeople. In fact, last fall it confused the City Council enough that members briefly balked on funding further construction. But it’s actually a popular new method that can save time and money, according to Ennis Parker, a Georgia Tech School of Architecture professor.
Parker teaches Georgia Tech students about alternative construction methods and was hired by Sandy Springs as a consultant to explain “CM at risk” to city officials and oversee the City Springs project. In a recent interview, Parker explained why CM at risk is popular and how it works.
“Most of the major buildings done in Atlanta are being done this way,” Parker said. Among them: the new Falcons football stadium downtown and the State Farm regional headquarters in Dunwoody, both of which are being built by Holder Construction, the City Springs contractor.
But Parker admits that “CM at risk” is a confusing concept to many. “It took a little explaining to the city because they weren’t used to this process,” he said of the preparations for the City Springs project on Roswell Road.
The traditional construction method is known in the trade as “design-bid-build.” In that method, a property owner hires an architect, who produces blueprints. Then the owner puts the design out for competitive bids from contractors. The lowest-bidding contractor is typically awarded the project, then produces an estimated budget and constructs the building.
“Everybody understands that process…but it has some problems,” Parker said. “Essentially, the biggest problem is, you go through that elaborate and linear design process…and you don’t really know until you bid the job what it’s going to cost.”
Especially when the construction market has volatile labor and material prices—as it does today—the costs can end up much higher than expected from a low-balled bid. That can result in major redesigns or cuts in quality. “And on a project of this [City Springs] size, that process lasts a long time,” Parker added. “It can take a year or more to get all the way through the programming…and you will have spent millions and millions of dollars.”
Long delays and skyrocketing budgets on major projects have sparked alternative construction and bidding methods. “CM at risk” is among the most popular, Parker said. About 15 years ago, he said, the Georgia Legislature approved “CM at risk” as a construction method for all state and municipal public works projects.
“In a nutshell, the difference is ‘CM at risk’ is a collaborative process,” Parker said. “It avoids a lot of the risks that are associated with the old method…[and speeds the project with] overlap of the design and construction.”
The big difference is the construction contractor is hired early on and works alongside the architect, rather than winning a bid at the end of the design process. “They become a member of the team,” Parker said.
That means an estimated budget is produced much earlier and is more likely to be realistic, he said. While surprises can still happen, they are likely to be smaller and easier to absorb through the constantly tweaked design process, he said.
That’s why the city has been confident in saying that City Springs will cost no more than $220 million even though the final budget is not set. But it’s also what confused members of City Council, with a budget that showed both estimates and money already spent mingled together.
The collaboration of architect and contractor also makes for speed. “That allows you, before the design is complete, to start construction,” Parker said.
At City Springs, that meant work on the foundations could begin because of a general agreement between designers and builders, while interior designs and exterior decorations were still being drawn up.
What’s the downside? “The main concern that you hear about this is some people think because you’re not hard-bidding it in a competitive environment, you aren’t getting the lowest price…and that’s probably true,” Parker said. But the savings in time and avoided cost overruns mean it’s usually cheaper in the long run, he said.
The “CM at risk” process is actually less financially risky for all parties and the name is a quirk of construction industry jargon, Parker said. “[Construction managers] are at risk in both methods and they are probably more at risk in the traditional method. And the owner always has the final risk,” he said.