What is Guaranteed Maximum Price (GMP)?

A Guaranteed Maximum Price (GMP) is a construction contract agreement between the owner and the contractor that establishes the maximum amount that the owner will pay for the project. This type of contract provides a level of financial security for the owner, as it ensures that the project will not exceed a certain cost. The GMP is typically determined through a thorough analysis of the project's scope, schedule, and budget, and is based on a detailed estimate of the total costs involved in completing the project.The GMP contract also incentivizes the contractor to complete the project within the agreed-upon budget, as any cost overruns will be the responsibility of the contractor. This helps to prevent unexpected expenses and ensures that the project stays on track financially. Additionally, the