Finance & Contracts

GMP (Guaranteed Maximum Price)

A hybrid contract: cost-plus during construction, but capped at a maximum total price.

GMP combines the flexibility of cost-plus (with open-book pass-through) and the certainty of fixed-price (the cap). Common on larger residential builds and commercial work. The contractor and owner share savings if actual costs come in below the GMP. Above the cap, the contractor absorbs overruns. Requires detailed estimating and open-book accounting throughout the project.