Holloway Consulting is a construction consulting firm that provides a wide range of advisory, management and disputes services to all parties in the construction process, including law firms, public agencies, developers, owners, design professionals, surety and insurance carriers, construction managers, general and trade contractors, etc.

This page provides construction owners’ views of issues that have arisen in Holloway’s projects and disputes on Guaranteed Maximum Price (GMP) Contracts and Cost-Plus contracts:

Construction Contract Dispute Consulting Experts

Guaranteed Maximum Price (GMP) Contracts and COST-PLUS CONTRACTs

Does “GMP” mean Guaranteed Maximum Price or Guaranteed Minimum Price?

Holloway Consulting’s experience has shown that owners and contractors can have very differing views of the terms and conditions of their Cost-Plus and Guaranteed Maximum Price (GMP) contracts. For example, on the one hand, some owners believe that contractors are entitled to be paid the entire GMP amount only if, among other things, allocable and reimbursable costs are equal to the original budgets in the application for payment, thus establishing the GMP as a “maximum” price, e.g., the maximum amount payable to the contractor.

On the other hand, some contractors believe that, if they complete the work consistent with the plans and specs, they are entitled to be paid the entire GMP amount, regardless of how incurred costs compare to their pay application budgets. Some contractors also believe they should be paid for costs over and above the pay application budgets, thereby effectively establishing the GMP as a “minimum” price, e.g., the minimum amount the contractor expects to be paid.

This series of posts addresses an owner’s view of non-reimbursable costs under a guaranteed maximum price contract. Subsequent posts will compare and contrast contractors’ viewpoints of GMP issues.

AN OWNER’S PERSPECTIVE

Our visitors will not be surprised that some owner-clients believe that, unless otherwise specified in the agreement, the types of costs covered in these posts are generally not reimbursable under many Guaranteed Maximum Price contracts, such as AIA Document A111. Moreover, depending upon the circumstances of the project and contract, such costs may not be billable by a contractor or payable by an owner, unless specifically approved in advance by the owner.

Read our next article on costs owners believe are not reimbursable under some of these Guaranteed Maximum Price (GMP) Contracts and Cost-Plus contract forms.

And, the right side bar of each page here contains many related articles and posts.

The Holloway Consulting Group, LLC
Construction Advisers, Managers and Experts
12081 W. Alameda Pkwy., #450
Lakewood, CO 80228-2701
Denver Phone: (303) 984-1941
International Toll Free: (888) 545-0666
Fax: (303) 716-0432

Email: steve.holloway@disputesinconstruction.com
Blog: disputesinconstruction.com
Web: hcgexperts.com

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