GMP – Guaranteed Maximum Price
Another delivery system we have employed with increasing frequency is the GMP – Guaranteed Maximum Price. This system is growing in popularity with both owners and quality contractors alike.
In a GMP contract, the fee of the contractor selected is locked in at the beginning of a project, normally based on a fixed percentage of the original estimate. Then, the owner and contractor become partners in the process of trying to add efficiencies wherever possible to bring in the actual cost at something less than the estimate. In many cases, both parties share in the cost savings realized. And a similar process helps control costs of any additions, as well.
This system creates an atmosphere of partnership rather than an adversarial relationship. Everything is open book and above board. And it results in both parties working toward the same objectives, which not only saves time and money, but also makes the process much more enjoyable for everyone involved.
In addition, because the contractor’s compensation is assured, work on preliminary stages of the project can begin sooner, with drawings as little as 30% complete. Since everyone’s interests are protected down the line, there is no need to wait for every last detail to be finalized before work can begin.
