This project delivery method involves a commitment by a construction management firm to deliver a project within a guaranteed maximum price (GMP). The construction manager provides pre-construction services such as design review, value engineering, and constructability analysis during the design phase. The firm then takes on the risk for cost overruns during the construction phase, incentivizing efficient project management and cost control. As an example, a hospital expansion project could employ this method to ensure budget certainty while benefiting from the construction manager’s expertise in healthcare facility construction.
Employing this approach offers several benefits, including enhanced collaboration between the owner, designer, and contractor from the outset. This collaboration facilitates proactive problem-solving and informed decision-making throughout the project lifecycle. The guaranteed maximum price provides financial predictability for the owner, minimizing the risk of unexpected cost increases. Historically, this approach emerged as a response to the need for greater cost control and efficiency in complex construction projects.
The subsequent sections will delve into the specific responsibilities of the construction manager, the contractual elements of this delivery method, and the factors that contribute to its successful implementation.
1. Guaranteed Maximum Price
The Guaranteed Maximum Price (GMP) stands as a cornerstone of the construction manager at risk (CMAR) project delivery method. It represents a ceiling on the total cost for which the construction manager is responsible, fundamentally shaping the dynamics and incentives within the project.
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Cost Certainty
The GMP provides the project owner with a defined budget limit. This financial predictability is crucial for securing funding, managing stakeholders’ expectations, and overall project planning. For instance, if a university is constructing a new library under a CMAR agreement with a $20 million GMP, the university knows its financial exposure is capped at that amount for the construction phase.
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Shared Savings
Many CMAR contracts incorporate a shared savings clause, stipulating that if the project is completed for less than the GMP, the owner and construction manager split the savings according to a pre-agreed ratio. This arrangement incentivizes the construction manager to find cost-effective solutions and maintain efficient operations. For example, if the aforementioned library is completed for $18 million, the $2 million savings might be shared 50/50 between the university and the construction manager.
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Risk Allocation
The GMP clarifies the risk allocation between the owner and the construction manager. While the owner has cost certainty up to the GMP, the construction manager assumes the financial risk of cost overruns. This compels the construction manager to rigorously manage costs, schedule, and subcontractors. If unforeseen site conditions lead to expenses exceeding the GMP, the construction manager bears those costs unless the contract stipulates otherwise for specific, pre-defined exceptions.
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Change Order Management
The GMP necessitates a robust process for managing change orders. Any changes to the original scope of work typically require adjustments to the GMP. A well-defined change order process, agreed upon by all parties, is essential to ensure that the GMP remains a realistic reflection of the project’s cost. For example, if the university decides to add a new wing to the library after the initial GMP is set, a change order would need to be negotiated and approved to increase the GMP accordingly.
In summary, the Guaranteed Maximum Price is inextricably linked to the core definition of the construction manager at risk delivery method. It establishes financial accountability, incentivizes cost-consciousness, and dictates the risk profile of the project, shaping the behavior and responsibilities of the involved parties. Its successful implementation hinges on clear communication, proactive management, and a collaborative approach throughout the project lifecycle.
2. Early Collaboration
Early collaboration, in the context of a construction manager at risk project, represents a fundamental shift from traditional design-bid-build methodologies. It necessitates the construction manager’s involvement during the project’s design phase, a departure that profoundly impacts cost control, schedule adherence, and overall project success. This involvement is a direct consequence of the construction manager at risk model, where the firm assumes responsibility for delivering the project within a guaranteed maximum price. As such, early integration allows the construction manager to contribute constructability reviews, value engineering suggestions, and scheduling expertise before the design is finalized. For example, during the design of a new research laboratory, the construction manager might identify potential cost savings by suggesting alternative materials or construction techniques that maintain the project’s functional requirements while reducing expenses. This proactive involvement is a direct result of, and is critical to, the effective application of the construction manager at risk approach.
The practical significance of this early collaboration extends beyond mere cost savings. It fosters a collaborative environment where the owner, designer, and construction manager work together to identify and mitigate potential risks early in the project lifecycle. For instance, a construction manager involved in the design of a new hospital wing might identify potential code compliance issues or logistical challenges related to integrating the new wing with the existing facility. Addressing these issues during the design phase is far less costly and disruptive than resolving them during construction. Furthermore, early collaboration promotes a shared understanding of the project’s goals and priorities, ensuring that all stakeholders are aligned and working towards the same objectives. This alignment minimizes the potential for conflicts and delays that can arise from miscommunication or conflicting priorities.
In summary, early collaboration is not merely an ancillary benefit of the construction manager at risk model; it is an integral component that directly contributes to the project’s success. The construction manager’s involvement during the design phase enables proactive risk mitigation, cost optimization, and enhanced communication among stakeholders. This proactive approach, inherent in the construction manager at risk definition, contrasts sharply with traditional approaches and underscores the value of integrating construction expertise early in the project lifecycle. Challenges to successful early collaboration may include resistance to change from stakeholders accustomed to traditional methods or difficulties in establishing clear roles and responsibilities. However, the benefits of early collaboration far outweigh these challenges, making it a cornerstone of successful construction manager at risk projects.
3. Risk Mitigation
Risk mitigation is inextricably linked to the construction manager at risk definition, forming a core tenet of this project delivery method. The construction manager, assuming a contractual obligation for a guaranteed maximum price, inherently shoulders significant financial and operational risks. This responsibility necessitates proactive risk identification, assessment, and mitigation strategies throughout the project lifecycle. Failure to effectively mitigate risks directly impacts the construction manager’s profitability and potentially compromises project success. A real-world example involves a high-rise building project encountering unforeseen soil conditions, requiring extensive and costly remediation. Under a CMAR agreement, the construction manager bears the primary responsibility for managing these costs, highlighting the critical role of thorough pre-construction site investigations and contingency planning.
The CMAR framework facilitates risk mitigation through various mechanisms. The early involvement of the construction manager in the design phase allows for constructability reviews and value engineering, identifying and addressing potential risks before they escalate during construction. For instance, a review might reveal design elements that are prone to weather-related delays, prompting adjustments to the design or construction schedule. The guaranteed maximum price structure also incentivizes the construction manager to actively manage subcontractors and suppliers, ensuring they adhere to quality standards and schedules, thereby mitigating risks associated with substandard workmanship or material delays. Furthermore, the collaborative nature of CMAR projects fosters open communication and information sharing among the owner, designer, and construction manager, enabling a collective approach to risk identification and mitigation.
In conclusion, the relationship between risk mitigation and the construction manager at risk definition is one of mutual dependence. The CMAR framework intrinsically assigns risk to the construction manager, while simultaneously providing the tools and incentives for effective risk mitigation. A comprehensive understanding of risk mitigation strategies is essential for construction managers operating under this delivery method, requiring expertise in areas such as contract negotiation, insurance coverage, and project management best practices. Effective risk mitigation not only protects the construction manager’s financial interests but also contributes significantly to the successful completion of the project, achieving the owner’s objectives while minimizing potential disruptions and cost overruns.
4. Design Phase Input
Design phase input is a critical element intrinsically linked to the construction manager at risk definition. The model fundamentally shifts the traditional project sequence by integrating the construction manager (CM) into the design process. This involvement, initiated prior to finalizing construction documents, is not merely advisory; it is a proactive engagement designed to optimize project outcomes in terms of cost, schedule, and constructability. The CM’s expertise, applied during the design phase, directly influences the project’s financial viability and operational efficiency. For example, a CM involved in the design of a data center may suggest alternative cooling system layouts or material selections that reduce long-term energy consumption and construction costs, while adhering to performance specifications. The causal relationship is clear: informed design phase input, facilitated by the CMAR structure, directly results in more efficient and cost-effective project execution. Without this early input, projects risk incorporating design elements that are difficult or expensive to construct, leading to potential budget overruns and schedule delays.
The practical significance of design phase input within the CMAR context extends to mitigating risks and ensuring constructability. The CM’s perspective allows for identification of potential construction challenges early on, enabling proactive solutions and adjustments to the design. This reduces the likelihood of unforeseen problems arising during the construction phase, which can lead to costly change orders and delays. For instance, the CM’s input might identify potential site access issues or geotechnical challenges that require modifications to the foundation design. Moreover, design phase input facilitates value engineering, a systematic process of identifying and eliminating unnecessary costs without compromising the project’s functionality or quality. This can involve suggesting alternative materials, construction methods, or design features that achieve the same performance objectives at a lower cost. This collaborative approach in the design phase ultimately streamlines the construction process and contributes to the successful completion of the project within the guaranteed maximum price.
In summary, design phase input is not merely a supplementary activity within the construction manager at risk framework; it is a fundamental component that drives project success. The CM’s early involvement enables proactive risk mitigation, cost optimization, and enhanced constructability, directly contributing to the achievement of project goals. While challenges may arise in coordinating diverse stakeholder perspectives during the design phase, the benefits of collaborative design far outweigh the difficulties. The integration of construction expertise into the design process, as defined by the CMAR model, represents a paradigm shift that fosters efficiency, reduces risks, and ultimately delivers superior project outcomes.
5. Cost Control
Cost control is an intrinsic element within the construction manager at risk framework. The delivery method’s effectiveness hinges on the ability to manage and contain project expenses within a pre-defined budget, typically formalized as a Guaranteed Maximum Price (GMP). Effective cost control mechanisms are not merely desirable, but essential to the CMAR’s success and viability.
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Guaranteed Maximum Price (GMP) Compliance
The GMP serves as the primary cost control mechanism, establishing a ceiling on project expenses. The construction manager assumes the financial risk of exceeding this price, incentivizing efficient project management. For instance, if a museum expansion project is undertaken using CMAR with a GMP of $15 million, the construction manager is responsible for delivering the project within this budget, absorbing any cost overruns not attributable to owner-directed changes.
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Value Engineering
Value engineering is a systematic process of identifying and eliminating unnecessary costs without compromising the project’s functionality or quality. The construction manager, with their practical construction expertise, plays a key role in identifying value engineering opportunities during the design phase. An example might involve suggesting alternative materials or construction methods that achieve the same performance standards at a lower cost, such as substituting a precast concrete facade for a more expensive custom-fabricated system.
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Subcontractor Management
Effective management of subcontractors is critical to cost control. The construction manager is responsible for selecting qualified subcontractors through a competitive bidding process, negotiating favorable contract terms, and monitoring their performance throughout the project. Poor subcontractor management can lead to cost overruns due to delays, rework, or substandard workmanship. For example, rigorously vetting potential electrical subcontractors and closely monitoring their installation work can prevent costly electrical system failures later in the project.
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Change Order Management
Change orders, which represent modifications to the original scope of work, can significantly impact project costs. Effective change order management involves establishing a clear process for reviewing, approving, and pricing change orders. The construction manager is responsible for minimizing the number and cost of change orders by proactively identifying potential issues and carefully evaluating the impact of proposed changes. For instance, clearly defining the scope of work in the initial contract documents and conducting thorough pre-construction surveys can help to reduce the likelihood of unforeseen site conditions that necessitate costly change orders.
These facets collectively demonstrate that cost control is not simply an ancillary benefit of construction manager at risk; it is an inherent characteristic that dictates project execution. The CMAR model, with its emphasis on collaboration and risk transfer, creates a framework where cost consciousness is paramount, incentivizing all stakeholders to work together to deliver projects efficiently and within budget. Without stringent cost control measures, the very foundation of the CMAR approach is undermined.
6. Owner Advisor
The presence of an Owner Advisor within a Construction Manager at Risk (CMAR) project is a strategic consideration, not a mandatory element, yet it profoundly influences the project’s dynamics and success. The Advisor’s role directly interacts with the core principles of the construction manager at risk definition, shaping the Owner’s decision-making process and oversight capabilities. While the CMAR approach inherently provides the Owner with a guaranteed maximum price and collaborative environment, an Advisor offers specialized expertise to safeguard the Owner’s interests throughout the project.
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Contract Negotiation Support
The Owner Advisor possesses specialized knowledge in construction law and contract management. This expertise becomes invaluable during the negotiation of the CMAR contract. The Advisor can scrutinize the proposed guaranteed maximum price, contingency allowances, and risk allocation provisions, ensuring they are equitable and aligned with the Owner’s best interests. For example, the Advisor might identify clauses that disproportionately favor the Construction Manager or expose the Owner to undue financial risks. This detailed review strengthens the contractual foundation of the CMAR project.
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Performance Monitoring and Oversight
While the Construction Manager is responsible for project execution, the Owner Advisor provides independent monitoring of project performance. The Advisor tracks progress against the schedule, monitors cost expenditures, and assesses the quality of workmanship. This oversight allows the Owner to proactively identify potential issues and address them before they escalate into significant problems. For instance, the Advisor might flag delays in material procurement or identify substandard construction practices, prompting corrective action by the Construction Manager.
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Change Order Review and Validation
Change orders are an inherent aspect of construction projects, and their financial impact can be substantial. The Owner Advisor serves as a critical reviewer of proposed change orders, ensuring that they are justified, reasonably priced, and within the scope of the project. The Advisor’s technical expertise allows for a thorough evaluation of the necessity and cost of each change, preventing unwarranted expenses. For example, the Advisor might challenge a proposed change order for unforeseen site conditions, arguing that the Construction Manager should have reasonably anticipated those conditions during the pre-construction phase.
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Dispute Resolution Assistance
Despite best efforts, disputes may arise during the course of a CMAR project. The Owner Advisor can provide valuable assistance in resolving these disputes efficiently and effectively. The Advisor’s objective perspective and technical knowledge can facilitate mediation or negotiation, helping the parties reach a mutually acceptable resolution. For example, the Advisor might analyze project documentation and provide expert testimony to support the Owner’s position in a contract dispute with the Construction Manager.
In conclusion, the engagement of an Owner Advisor complements the CMAR project delivery method by providing specialized expertise and independent oversight. The Advisor strengthens the Owner’s position during contract negotiation, monitors project performance, validates change orders, and assists in dispute resolution. This additional layer of expertise helps ensure that the project remains aligned with the Owner’s objectives and that their interests are protected throughout the construction process. The CMAR framework, while collaborative, benefits from the Owner having independent support and guidance.
7. Constructability Review
Constructability review is an integrated and essential process within the construction manager at risk (CMAR) project delivery method. Its significance is directly derived from the core principles of the CMAR definition, where the construction manager assumes responsibility for delivering a project within a guaranteed maximum price (GMP). This responsibility inherently compels the construction manager to scrutinize the design documents for potential construction challenges, inefficiencies, and cost drivers before construction commences. A constructability review, therefore, is not merely an optional service but a proactive measure to mitigate risks and optimize project outcomes under the CMAR framework. For example, consider the construction of a new hospital. During the design phase, a constructability review might identify that a proposed architectural design feature requires specialized and costly fabrication techniques. By suggesting alternative, more readily constructible designs that meet the same functional requirements, the construction manager can reduce project costs and minimize potential delays. This proactive intervention is a direct result of the inherent responsibilities placed upon the construction manager by the CMAR agreement.
The practical application of constructability reviews within CMAR projects extends beyond mere cost reduction. It significantly impacts project scheduling, safety, and overall quality. By identifying potential logistical challenges or safety hazards early in the design phase, the construction manager can work with the design team to develop solutions that minimize risks and enhance constructability. For instance, a constructability review of a bridge construction project might reveal that the proposed sequence of construction requires temporary supports that could obstruct navigable waterways. By modifying the construction sequence or designing alternative support structures, the construction manager can avoid potential delays and safety hazards. Furthermore, constructability reviews promote collaboration between the owner, designer, and construction manager, fostering a shared understanding of the project’s goals and constraints. This collaborative environment facilitates proactive problem-solving and informed decision-making, leading to more efficient and successful project execution.
In conclusion, the constructability review process is an indispensable component of the construction manager at risk model. Its integration into the project lifecycle directly addresses the cost control, risk mitigation, and efficiency objectives inherent in the CMAR definition. While implementing effective constructability reviews requires experience and expertise, the benefits, in terms of reduced costs, minimized risks, and improved project outcomes, far outweigh the challenges. Understanding this connection is crucial for owners, designers, and construction managers seeking to leverage the advantages of the CMAR delivery method and achieve project success.
8. Value Engineering
Value engineering is integrally linked to the construction manager at risk model. This method’s definition hinges upon a collaborative environment where the construction manager, engaged early in the design phase, contributes expertise to optimize project value. The underlying cause is the construction manager’s assumption of financial risk via the Guaranteed Maximum Price (GMP). To mitigate this risk, a systematic value engineering process becomes essential. This involves analyzing design elements, materials, and construction methods to identify potential cost savings without compromising functionality or quality. For instance, on a school construction project, the construction manager might propose substituting a specified exterior cladding material with a less expensive, yet equally durable, alternative, resulting in significant cost reductions without affecting the building’s aesthetic appeal or performance. This proactive approach directly reflects the CMAR model’s emphasis on cost control and collaborative problem-solving.
The practical significance of understanding value engineering within the CMAR context extends to several key areas. It allows owners to maximize their return on investment by ensuring that project costs are optimized without sacrificing essential features or functionality. It empowers design teams to leverage the construction manager’s practical knowledge and experience to create more constructible and cost-effective designs. It provides the construction manager with the tools and processes necessary to effectively manage project costs and mitigate financial risks. The value engineering process often involves a structured workshop where the owner, designer, and construction manager collaboratively brainstorm and evaluate potential cost-saving opportunities. This collaborative approach fosters trust and communication, leading to more informed decision-making and improved project outcomes. Consider a stadium renovation project. The value engineering process might identify opportunities to streamline the structural design, reduce material waste, and optimize the construction schedule, resulting in substantial cost savings and a faster project completion.
In summary, value engineering is not merely an ancillary service within the construction manager at risk framework; it is a core component that directly contributes to project success. Its integration into the project lifecycle ensures that project costs are optimized, risks are mitigated, and the owner’s objectives are achieved. Challenges may include resistance to change from stakeholders accustomed to traditional design approaches or difficulties in quantifying the benefits of value engineering proposals. However, the proactive implementation of a robust value engineering process is crucial for realizing the full potential of the CMAR delivery method. Without it, the benefits associated with early construction manager involvement and a guaranteed maximum price are significantly diminished.
9. Project Delivery
The construction manager at risk model represents a specific approach to project delivery, fundamentally shaping the process from design inception to project completion. The selection of this delivery method directly influences the roles, responsibilities, and contractual relationships among the project stakeholders. The cause of employing this approach often stems from a need for enhanced cost control, schedule certainty, and early collaboration between the design and construction teams. The effect is a project execution strategy where the construction manager assumes significant financial risk, incentivizing efficient and effective project management. For example, a complex research facility project with stringent budget constraints might utilize this model to benefit from the construction manager’s pre-construction services and guaranteed maximum price, ensuring the project remains within budget while meeting its functional requirements.
Project delivery, as defined by the construction manager at risk approach, encompasses a series of distinct phases, each with its unique challenges and opportunities. The pre-construction phase involves close collaboration between the owner, architect, and construction manager to develop detailed design documents, perform constructability reviews, and establish a guaranteed maximum price. The construction phase then focuses on executing the design, managing subcontractors, and controlling costs to ensure the project is completed on time and within budget. Effective communication, proactive risk management, and rigorous quality control are essential throughout all phases. For example, implementing Building Information Modeling (BIM) can facilitate better coordination among the project teams, improve clash detection, and enhance overall project delivery efficiency.
In summary, project delivery is not merely a logistical process but an integral component of the construction manager at risk definition. Its successful implementation requires a clear understanding of the roles and responsibilities of each stakeholder, a commitment to collaboration and communication, and a proactive approach to risk management. Challenges may arise from differing stakeholder priorities or unforeseen site conditions, but the structured framework of the CMAR model provides a mechanism for addressing these challenges effectively. The ultimate goal is to deliver a high-quality project that meets the owner’s objectives while adhering to budget and schedule constraints, demonstrating the value and effectiveness of the CMAR project delivery approach.
Frequently Asked Questions Regarding Construction Manager at Risk
This section addresses common inquiries concerning the project delivery method in question, providing clarification on key aspects and potential misconceptions.
Question 1: How does the Guaranteed Maximum Price (GMP) function within this arrangement?
The GMP establishes a financial ceiling for the project’s construction costs. The construction manager assumes financial responsibility for costs exceeding this limit, unless changes originate from the owner’s directives.
Question 2: What advantages does early collaboration offer?
Early collaboration allows the construction manager to contribute to the design phase, identifying potential cost savings, constructability issues, and schedule optimization opportunities before construction commences.
Question 3: How is risk mitigation addressed in this project delivery method?
The construction manager’s assumption of financial risk under the GMP incentivizes proactive risk identification and mitigation strategies throughout the project lifecycle, from pre-construction planning to final completion.
Question 4: What value does the construction manager bring to the design phase?
The construction manager provides practical insights into construction methods, material selection, and potential cost implications, ensuring that the design is both aesthetically pleasing and economically feasible to construct.
Question 5: How is cost control maintained throughout the project?
Cost control is achieved through a combination of the GMP, value engineering, rigorous subcontractor management, and a well-defined process for managing change orders, ensuring that project expenses remain within the established budget.
Question 6: What is the role of an Owner Advisor in this project delivery method?
While not always present, an Owner Advisor provides independent oversight and expertise to protect the owner’s interests, offering assistance in contract negotiation, performance monitoring, change order review, and dispute resolution.
The method offers a collaborative approach with built-in incentives for cost-effectiveness and risk mitigation.
The next article section will delve into successful project execution.
Tips for Effective Construction Manager at Risk Implementation
The following guidance is designed to optimize the implementation of the project delivery method. Adherence to these principles will maximize the benefits associated with the method, while mitigating potential risks.
Tip 1: Prioritize Early Collaboration: Involve the construction manager during the design phase. This proactive engagement facilitates constructability reviews, value engineering, and a shared understanding of project goals, minimizing costly design revisions later in the project lifecycle.
Tip 2: Establish a Robust Guaranteed Maximum Price (GMP): Conduct thorough due diligence during GMP negotiation. A well-defined GMP accounts for all foreseeable project costs, including contingencies for unforeseen circumstances. This provides financial certainty and reduces the potential for disputes.
Tip 3: Implement a Transparent Change Order Process: Establish a clear and documented process for managing change orders. This process should outline the procedures for submitting, reviewing, pricing, and approving change orders, ensuring that all stakeholders are informed and aligned on any project modifications.
Tip 4: Foster Open Communication: Encourage open and honest communication among all project stakeholders, including the owner, architect, construction manager, and subcontractors. Regular communication helps to identify and address potential problems early on, preventing them from escalating into major issues.
Tip 5: Conduct Thorough Risk Assessments: Proactively identify and assess potential project risks, such as site conditions, material availability, and regulatory compliance. Develop mitigation strategies to address these risks, minimizing their potential impact on project cost and schedule.
Tip 6: Emphasize Quality Control: Implement a comprehensive quality control program to ensure that all work meets the specified standards. Regular inspections and testing help to identify and correct defects early on, preventing costly rework and ensuring project durability.
Tip 7: Carefully Select Subcontractors: Choose subcontractors based on their qualifications, experience, and track record. A thorough vetting process ensures that subcontractors have the necessary expertise and resources to perform their work to the required standards.
The integration of these tips will substantially contribute to the effective use, maximizing its potential to deliver projects within budget, on schedule, and to the highest quality standards.
The subsequent section will discuss additional resources to further your understanding.
Conclusion
This exploration has illuminated the core tenets of the construction manager at risk definition, emphasizing its collaborative nature, risk allocation mechanisms, and commitment to a guaranteed maximum price. The value of early construction manager involvement, proactive risk mitigation, and rigorous cost control has been underscored as essential components of successful project implementation.
The judicious application of the construction manager at risk approach can yield significant benefits in terms of cost certainty, schedule adherence, and overall project quality. Further investigation and careful consideration of its suitability for specific projects remains a crucial responsibility for all stakeholders seeking optimal construction outcomes.
