Glossary
Construction manager/general contractor (CM/GC) (also called CM-at-Risk, and CMAR): A project delivery method where the contractor is selected during design and furnishes preconstruction services. Design services are either completed by the owner’s engineering personnel or consultant under a separate contract. Project construction price is negotiated during preconstruction using open-book procedures. If an agreement is reached the construction contract is awarded to the CM/GC contractor.
Construction services fee: The amount paid to the contractor to compensate it for general conditions, home office overhead costs, and profit. This is a separate amount to facilitate open-book negotiations of the direct costs.
Contingency: The amount budgeted to cover costs that may result from incomplete design, unforeseen and unpredictable conditions, or uncertainties within the defined project scope. The actual amount is subject to negotiation and mutual agreement in CM/GC and PDB.
Guaranteed maximum price (GMP): An overarching term that is intended to cover the variations in terminology in use by different DOTs. This is the final agreed price for the construction contract in CM/GC and the design-build contract in PDB. The typical terms included are negotiated construction price, lump sum price, target price, and other terms that are unique to the specific agency’s official definitions.
Off-ramp: Contract language that gives the owner the right to terminate the preconstruction contract if an agreement on the construction cost is not reached and re-bid the contract through another contract strategy. This provides the owner a degree of protection against the CM/GC or PDB contractor providing an unreasonable GMP price.
Open-book estimating: A term that refers to the sharing of project information, such as actual project costs, between owner and contractor. It means that the project execution method is transparent to all parties. It indicates a level of collaboration personnel or consultant member of the design-builder’s team. Project price is negotiated using open-book procedures after award of the PDB contract.
Open-book negotiations: The process of arriving at a mutually agreed-upon GMP based on the pricing, schedule, and sequencing information provided to the owner by the CM/GC contractor or the progressive design-builder.
Preconstruction services fee: The amount paid the contractor for preconstruction services during the design phase.
Progressive design-build (PDB): DB project delivery where the design-builder is selected on a basis of qualifications and past performance with little or no price competition. Design services
are provided by the design-builder’s engineering that allows for defining risk and profit appropriately and creating a high level of trust among all the parties.
State’s estimate: An official estimate prepared by an authorized entity that is used in the procurement process. Its use is unique to each state that requires one.
