Guaranteed maximum price
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) such that the contractor is compensated for actual costs incurred plus a fixed fee, which is limited to a maximum price. The contractor is responsible for cost overruns greater than the guaranteed maximum price unless the GMP has been increased by a formal change order (only as a result of additional scope from the client, not from price overruns, errors, or omissions). Savings resulting from unexpectedly low costs are returned to the client.
This is different from a fixed-price contract, also known as stipulated price contract [1] or lump-sum contract whereby cost savings are typically retained by the contractor and essentially become additional profits.[2]
See also
[edit]References
[edit]- ^ Pawson, O., "Stipulated Price Contract", Canadian Consulting Engineer, accessed 14 December 2019
- ^ Cushman, Robert Frank (1999). Construction Law Handbook, Vol. 1. Aspen Law and Business. p. 357. ISBN 0-7355-0392-3.
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