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, 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 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

References

  1. Pawson, O., "Stipulated Price Contract", Canadian Consulting Engineer, accessed 14 December 2019
  2. Cushman, Robert Frank (1999). Construction Law Handbook, Vol. 1. Aspen Law and Business. p. 357. ISBN 0-7355-0392-3.
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