This is a cost-plus contract wherein reimbursments are paid to the contractor for all costs associated with construction plus a fixed fee. The accepted costs and fees are capped, so the cost risks are transferred to the contractor. Any savings from cost underruns may become a negotiation point between the owner and the general contractor or may completely be absored by the owner of the project.
Guaranteed Maximum Price (GMP)
This is a cost-plus contract wherein reimbursments are paid to the contractor for all costs associated with construction plus a fixed fee. The accepted costs and fees are capped, so the cost risks are transferred to the contractor. Any savings from cost underruns may become a negotiation point between the owner and the general contractor or may completely be absored by the owner of the project.
