GMP (Guaranteed Maximum Price)
A contract type where the contractor is compensated for actual costs up to a ceiling price.
GMP agreements set a maximum project cost, providing financial certainty while allowing for potential cost savings. They are crucial for budget management, risk allocation, and fostering collaboration between stakeholders. GMP contracts encourage cost control and transparency, ensuring projects remain within budget and incentivizing contractors to complete work efficiently and cost-effectively, ultimately enhancing project success and stakeholder trust.
Used in a sentence
The project was completed under a GMP contract to limit financial risk for the owner.
Synonyms/variation
Maximum Price
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