From... Cushman, Robert Frank (1999). *Construction Law Handbook, Vol. 1*.
Aspen Law and Business. p. 357.
ISBN
0-7355-0392-3
.
A *Guaranteed Maximum Price* (also known as GMP, Not-To-Exceed Price, NTE,
or NTX) contract is a cost-type contract (also known as an open-book
contract) where the contractor is compensated for actual costs incurred
plus a fixed fee *subject to a ceiling price*. The contractor is
responsible for cost overruns, unless the GMP has been increased via formal
change order (only as a result of additional scope from the client, not
price overruns, errors, or omissions). Savings resulting from cost
underruns are returned to the owner. This is different from a fixed-price
contract(also
known as
*stipulated price contract* or *lump-sum contract*) where cost savings are
typically retained by the contractor and essentially become additional
profits.
On Mon, Jan 23, 2012 at 4:58 PM, Larry Schwering wrote:
>
>
> I was hoping someone could direct me to a document that defines
> "Guaranteed Maximum Price" as it relates to a construction project
> utilizing a construction manager. I am involved with a project where the CM
> gave the owner a GMP only to exceed it by a considerable amount. I have
> reviewed the Owner/CM agreement as well as the general conditions and have
> found nothing. Perhaps I am overlooking it. Any assistance you could offer
> would be appreciated. Thank you.
>
> -------------------------------------------
> Larry Schwering AIA
> Larry Schwering Architect PLLC
> Lexington KY
> -------------------------------------------
>
>