Case Study: Construction Management at Risk used in Applied Engineering Building at UNI
Case Study Summary
The University of Northern Iowa used Construction Management at Risk for their Applied Engineering Building project. The construction schedule shows the overall project is 9 months behind schedule.
There is no “Risk” associated with CMR for the contractor. The CMR is allowed to give a GMP price without any outside competition. The owner has only one price with nothing to compare it to. The CMR is allowed to come up with a schedule and then have no consequences when the project comes in behind schedule. The CMR is allowed to include a construction contingency in the GMP to cover change orders even though they are being paid substantial money in CM Staff Expenses to make sure there are no change orders.
Construction Management at Risk does not appear to provide any benefits to the taxpayers of Iowa and should not be used.
Applied Engineering Building at
University of Northern Iowa
The University of Northern Iowa used CMR for their Applied Engineering Building project. The project was awarded on April 12, 2021. The CMR that was awarded the project was $428,675.00 more than the low bidder. The guaranteed maximum price was contractually agreed to on April 29, 2022 at $31,310,965.00. The schedule attached to the GMP stated Phase 1 would commence April 4, 2022, completing July 25, 2023. Phase 2 would start May 5, 2023, completing April 12, 2024.
The Applied Engineering Building, according to UNI press release published in the Northern Iowan has a Phase 1 completion date of March 18, 2024, which is approximately 10 months behind schedule. Phase 2 is projected to be completed by December 2024 which is approximately 9 months behind schedule. Within the GMP there was a construction contingency of $823,810.00 included. This provides money within the contract to pay for all change orders within the contract thereby keeping them out of the public view.
It does not appear that CMR can make any guarantees relating to budget or schedule. The time risk remains with the owner. The construction schedule shows the overall project is 9 months behind schedule. How has the risk been transferred to the CMR? The money risk has not been shifted to the CMR. It remains with the owner. The CMR is able to include a construction contingency to pay for the change orders. If the financial risk was truly with the CMR there would not be any construction contingency allowed. What makes it worse is the CMR was paid over $1.38 million in CM staff expenses to complete the project on time and without change orders. That does not appear to have happened.
Conclusion
Time risk and financial risk are still held by the owner in a Construction Management at Risk system.
