What does GMP stand for in contracting?

What does GMP stand for in contracting?

• A. Guaranteed Maximum Price
• B. General Management Plan
• C. Gross Maximum Purchase
• D. Guaranteed Margin Price

Answer: (A)

In contracting, the term GMP refers to a Guaranteed Maximum Price. This means the owner and contractor agree on a ceiling price for the work, and the contractor commits to completing the project for no more than that amount. The owner gains price certainty, while the contractor assumes the cost risk for overruns within the agreed scope, subject to changes via change orders. If the project costs less than the GMP, savings may stay with the owner or be allocated by the contract’s terms; if the scope increases, prices are adjusted accordingly up to the maximum. The other options aren’t standard contract terms for price ceilings: they don’t describe a mechanism where the project is bounded by a maximum price for the work, which is the key idea behind GMP.

In contracting, the term GMP refers to a Guaranteed Maximum Price. This means the owner and contractor agree on a ceiling price for the work, and the contractor commits to completing the project for no more than that amount. The owner gains price certainty, while the contractor assumes the cost risk for overruns within the agreed scope, subject to changes via change orders. If the project costs less than the GMP, savings may stay with the owner or be allocated by the contract’s terms; if the scope increases, prices are adjusted accordingly up to the maximum.

The other options aren’t standard contract terms for price ceilings: they don’t describe a mechanism where the project is bounded by a maximum price for the work, which is the key idea behind GMP.