![]() ![]() Naturally, the incentive is not always aligned with the owners desire to have the lowest cost project possible.Ī parallel estimating process allows the owner’s cost estimator to help manage the “risk” or “fluff” in the number. This is not a fault of the CM taking on the risk, but a reality of the nature of the contractual model chosen by owner. ![]() By merely highlighting the risk, the process escalated the need for a geotechnical direction, solidifying the approach and the cost exposure early in the project.Īs the CM is taking on the risk, from a business perspective, they will always understandably protect themselves when producing a GMP estimate. Since there was significant cost involved in the two approaches, the process allowed for the owner and design team to assess the cost and risk involved with both and highlighted the necessity to solve the geotechnical solution before the next round of estimating. At the Schematic reconciliation, both the CM and the Estimator came to the table with different approaches and different costs for assembling the berms. The healthcare team employed a parallel estimating approach. These berms would require large, complex geotechnical solutions and a series of gravel pyramidal “lifts” to stop subsiding. Given the nature of its elevation, it would require large earth berms to allow bridges to connect the fields to the surrounding high level campus. On a low lying flood plain, this project would accommodate numerous sports fields and recreational areas. This is often an unquantifiable benefit but the two contrasting views allow for a healthy discourse at the reconciliation meeting, highlighting areas of the project where both parties see risk and potential cost exposure. Having these two view points and opinions on scope, rates, quantity and constructability is an excellent way to flush out issues through the preconstruction process. When an owner pursues a GMP procurement strategy, they are advised to engage a cost estimator to provide a secondary touch-point for risk identification and risk elimination. ![]() In many instances, it is worth paying slightly more to have the CM manage and be accountable, especially if they base their GMP on insufficient documentation. Thus the CM is at risk and will protect themselves as needed based on exposure, given the quality of the documentation the GMP is based on.ĬM at Risk is typically used on complex and fast paced projects whereby the conditions and circumstances do not allow for a clear and easy bid process. While there are numerous reasons for this, aside from eliminating the competitive bid process it is primarily due to the CM accepting complete responsibility for the project and the bid documents. On average, GMP projects can be as much as 2-5% higher than a project contract that is procured through a hard bid with a general contractor. While CM at Risk is the delivery method specifically identified, this same process is also effective with other approaches such as Design-Build and Integrated Project Delivery. Since a GMP contract transfers project risk to the CM, Parallel Estimating or triangulation is an effective way to validate the GMP developed by the CM and understand just how much risk has been built into the number. When procuring a project with a Construction Manager (CM) under a Guaranteed Maximum Price (GMP) contract (also referred to as a CM at Risk), there are definitive advantages of employing an owner’s representative cost estimator to triangulate estimating in the preconstruction process and produce a parallel estimate. As pressure increases to understand capital cost prior to the first spade touching dirt, more healthcare owners are turning to a Parallel Estimating process to improve understanding of exposure and ensure a successful preconstruction phase and subsequent bid and award. ![]()
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