A contract clause setting a cost ceiling the contractor cannot exceed, protecting the owner from cost overruns.
A guaranteed maximum price (GMP) is a contract provision in which the contractor agrees not to exceed a stated maximum project cost, with the owner bearing no cost risk above that figure. If actual costs come in below the GMP, savings may be shared between owner and contractor. GMP contracts are common in construction manager at risk and design-build delivery.
The hospital signed a GMP contract at $48M, with a 50/50 savings split if the contractor delivered the project under budget.
Get AI-powered bid alerts, automated form filling, and proposal drafting.
Start Free Trial