ConsensusDocs recently published updates to the ConsensusDocs 500 Standard Agreement Between Owner and Construction Manager At-Risk. Construction Management At-Risk (CM@R), also known as CM/GC and CMc, is one of the three most commonly used project delivery methods in the design and construction industry. While design-bid-build is still the most commonly used project delivery method in the United States, CM@R and design-build are both increasing as a share of the marketplace. They are so well established that calling them alternative project delivery methods no longer seems appropriate.
CM@R helps facilitate the early involvement of the General Contractor and trade partners, thereby opening up opportunities for collaboration and effective communication. Significantly, the use of design assist (see ConsensusDocs 541) and building information modeling (BIM) (see ConsensusDocs 301) becomes more efficient under CM@R. CM@R helps fast-track projects as well as foster deeper collaboration with earlier input from the trades and the Construction Manager. CM@R can be used as a transition to integrated lean project delivery, as embodied by the ConsensusDocs 300, or an IPD-hybrid approach with the ConsensusDocs 305 Lean Addendum and 500 together.
Highlights regarding revisions to the ConsensusDocs 500 CM@R Standard agreement, which will be published in the third quarter of 2025, are below:
Limited Waiver of Consequential Damages
This clarifies that insurance coverage alone is insufficient to exclude the waiver of consequential damages; the insurance company must also pay the proceeds. (§6.7).
Shared Savings
A shared savings clause was added (§7.2)
Builder’s Risk Policy
The requirement to cover “existing structures” under this property insurance has been eliminated. Obtaining property insurance through a Builder’s Risk policy that covers damage to existing structures may not always be feasible. (§11.3.1).
Risk of Loss
There was also a clarification on when the risk of loss transfers. It now transfers at Substantial Completion rather than Final Completion (§11.3.6).
Interim Directives
Revised language provides additional clarity surrounding interim directives. Interim directives do not necessarily cause an increase in the GMP. ConsensusDocs uses this term to encompass directed change orders that are issued due to a lack of agreement on cost and schedule impacts, as well as field instructions. AIA uses the term “construction change directives (CCDs)” for a similar concept.
Reasonable Attorney Fees
Clarified that all reimbursable attorneys’ fees must be reasonable throughout the standard agreement. Significantly, ConsensusDocs is the only standard construction contract document family that provides for the non-prevailing party in claims to pay reasonable attorneys’ fees and court costs, a feature unique to ConsensusDocs’ standard contract documents.
Statute of Repose
Added statute of repose in addition to statute of limitations as reasons for barring commencing arbitration. Some state courts have ruled that the statute of limitations and statute of repose don’t apply to arbitration actions. Therefore, it is prudent to put this in standard contracts (§13.5.1.1).
Cost Reporting
Moved cost reporting language in §3.7.6.1to the cost-of-the-work section in §8.4. Added a three-year period to retain records or longer as required by applicable law.
No Waiver of Performance
Clarified the “no waiver of performance” language so that not necessarily enforcing or insisting upon a contractual right does not waive such contractual right by implication (§14.6).
Contingent Assignment
Added a required contingent assignment provision for suppliers as well as subcontractors in subcontractor and supplier agreements §5.3.2).
Contingency
Adds a definition of contingency (2.4.4) and clarifies that Contingency is part of the GMP (3.4.2.8)
Hazardous Materials
Created a duty to defend as part of the indemnity obligation to hold the owner harmless for hazardous materials brought to the site by the Constructor or someone for which Constructor is liable (§3.15.6).
Payment Applications
Provides the Owner additional assurances and supporting material for the payment application process (§10.2). Provided additional language regarding the potential rejection of a payment application and the resubmittal process (§10.3).
Bonds
Provides a new check-the-box option to set the penal sum based upon the GMP or agreed-upon estimate. Specified that performance and payment bonds must be issued by a surety company holding a certificate of authority to conduct surety business (§11.6).
Damaged Work
Clarified that CM’s obligations to remedy damage or loss do not apply to damage covered by an owner’s property insurance or is attributable to the owner or the owner’s separate contractors (§3.13.5).
Design Documents
Simplified language that the Owner may get a license for the Constructor to use the design documents through a license or other means (such as purchasing the copyright) (§2.3.1).
Warranty
Clarified that Constructor’s warranty obligations to correct material and equipment defects for owner-provided materials and equipment are limited to installation defects (§ 3.10.3).
Schedule
Revises language reflecting that the preliminary schedule is a precursor to the defined term Schedule of the Work (§3.3.3). Requires a submittal schedule within 30 days of commencing the Work (§3.16.1).
Tariffs remain a pressing issue in construction contracts in today’s A/E/C industry. CM@R, a cost-of-the-work agreement, helps address tariffs to a certain extent (See In Light of Tariff Uncertainty, Cost-Plus Contracts are a Great Solution). When the GMP is set and the ability to procure materials as soon as possible is also a factor, it maximizes the benefits of the CM@R project delivery method as a means to mitigate the impact of tariffs. The best way to address the uncertainty caused by the tariffs is to use a price escalation clause, such as the one found in ConsensusDocs 200.1. Information on price escalation clauses and other finer points related to tariffs is now addressed in the ConsensusDocs Tariffs and Price Escalation Resource Center, located here.
ConsensusDocs subscribers will gain access to the new version of the ConsensusDocs 500 CM@R standard contract upon publication. Existing users will continue to have access to the previous edition as well for the next 13 months. ConsensusDocs is a Coalition of over 40 different design and construction associations. Each group has an equal voice at the drafting table to write best-practice standard construction contracts that are fair to all stakeholders in the A/E/C industry. Participating ConsensusDocs Coalition associations are invited to provide two volunteers for the comprehensive drafting process, making up the Contract Content Advisory Council. Each group has the opportunity to post supplemental comments and guidance to their members and the broader segment of the industry through the ConsensusDocs Guidebook, which can be accessed for free here.
Comments or questions about this article can be directed to Brian Perlberg, Executive Director & Senior Counsel, ConsensusDocs Coalition, at bperlberg@ConsensusDocs.org.