GMP Contract in Construction: What It Means, How It Works, and What's at Risk
A GMP caps what the owner pays; the contractor absorbs overruns unless a contractual change basis applies. What matters is what is referenced in the documents at amendment—and whether coordination gaps survive into that package.
What GMP means
Savings treatment (owner vs shared) and contingency handling are contract-specific. Overruns above the ceiling sit with the contractor unless an approved change adjusts scope, time, or price.
How GMP is structured
Direct costs, general conditions, fee, and contingencies roll into the cap. CMAR typically executes preconstruction services first, then a GMP amendment when drawings support reliable pricing.
Risk both parties carry
- Owner: incomplete or uncoordinated CDs consume contingency via changes instead of prevention.
- Contractor: absorbs scope ambiguity embedded in the referenced set unless a change path exists.
Pre-GMP drawing review
Verify structural/MEP coordination, spec-to-drawing alignment, sheet completeness, and index accuracy before the amendment locks risk. Run a constructability / plan check style pass to reduce unknowns. See pre-GMP review and audiences on contractors / owners & developers.
Frequently asked questions
GMP vs lump sum?
Ceiling + shared risk mechanics vs fixed price at complete documents.
Can GMP increase?
Only through contractually valid changes—not silent coverage of bid misses.
GMP meaning?
Guaranteed Maximum Price ceiling.
GMP amendment?
Document fixing the cap and incorporating the drawing set by reference.
Why review drawings first?
The amendment ties dollars to that document snapshot.
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