A Guaranteed Maximum Price (GMP) clause in a contract establishes a ceiling on the total cost that the owner will pay to the contractor, protecting the owner from cost overruns while incentivizing the contractor to manage costs efficiently. Any savings generated under the maximum price typically benefit the owner, though such clauses may include provisions for shared savings between parties.
§ 3.2 Guaranteed Maximum Price Proposal § 3.2.1 At a time to be mutually agreed upon by the Owner and the Construction Manager, the Construction Manager shall prepare a Guaranteed Maximum Price proposal for the Owner’s and Architect’s review, and the Owner’s acceptance.
§ 3.2.2 To the extent that the Contract Documents are anticipated to require further development, the Guaranteed Maximum Price includes the Construction Manager’s costs of costs attributable to such further development consistent with the Contract Documents and reasonably inferable therefrom. Such further development does not include changes in scope, systems, kinds and quality of materials, finishes, or equipment, all of which, if required, shall be incorporated by Change Order.
§ 3.2.3 The Construction Manager shall include with the Guaranteed Maximum Price proposal a written statement of its basis, which shall include the following: .1 A list of the Drawings and Specifications, including all Addenda thereto, and the Conditions of the Contract; .2 A list of the clarifications and assumptions made by the Construction Manager in the preparation of the Guaranteed Maximum Price proposal, including assumptions under Section 3.2.2; .3 A statement of the proposed Guaranteed Maximum Price, including a statement of the estimated Cost of the Work organized by trade categories or systems, including allowances; the Construction Manager’s contingency set forth in Section 3.2.4; and the Construction Manager’s Fee; .4 The proposed baseline construction schedule in accordance with Section 3.10 of A201–2007 and the proposed Contract Time upon which the proposed Guaranteed Maximum Price is based; and .5 A date by which the Owner must accept the Guaranteed Maximum Price.
§ 3.2.4 In preparing the Construction Manager’s Guaranteed Maximum Price proposal, the Construction Manager shall include a contingency for the Construction Manager’s exclusive use to cover those costs that are included in the Guaranteed Maximum Price but not otherwise allocated to another line item or included in a Change Order. The Construction Manager is authorized to use the contingency as follows: 1. To carry out the full original intent of the documents, including Architect’s Supplemental Instructions, RFI responses, or other design coordination that may generate extra costs from time to time. This would not include any change in scope or other items that the Construction Manager could not have reasonably inferred from the Contract Documents. 2. Pay for performance of work within the scope of the contract including work that was unallocated or not included in the scope of the subcontracts. 3. Unforeseen delays. 4. Weather protection and repairing damage done by weather. 5. Other Cost of the Work included in Article 6.1 that has not been included as a specific item in the Guaranteed Maximum Price. 6. Other unforeseen costs related to the project. Any balance remaining in the Contingency line item will be used in the calculation in shared savings as outlined in Article 6.1.7 along with any other line item savings.
§ 3.2.5 The Construction Manager shall meet with the Owner to review the Guaranteed Maximum Price proposal. In the event that the Owner or its agents discover any inconsistencies or inaccuracies in the information presented, they shall promptly notify the Construction Manager, who shall make appropriate adjustments to the Guaranteed Maximum Price proposal, its basis, or both.
§ 3.2.6 If the Owner notifies the Construction Manager that the Owner has accepted the Guaranteed Maximum Price proposal in writing before the date specified in the Guaranteed Maximum Price proposal, the Guaranteed Maximum Price proposal shall be deemed effective without further acceptance from the Construction Manager. Following acceptance of a Guaranteed Maximum Price, the Owner and Construction Manager shall execute one or more Guaranteed Maximum Price Amendments amending this Agreement. The Guaranteed Maximum Price Amendments shall set forth the agreed upon Guaranteed Maximum Price with the information and assumptions upon which it is based.
§ 3.3.1.2 The Construction Phase shall commence upon the Owner’s execution of the Guaranteed Maximum Price Amendment or, prior to acceptance of the Guaranteed Maximum Price proposal, by written agreement of the parties. The written agreement shall set forth a description of the Work to be performed by the Construction Manager, and any insurance and bond requirements for Work performed prior to execution of the Guaranteed Maximum Price Amendment.
Effective September 13, 2021, Krystal, entered into a guaranteed maximum price amendment (the “Amendment”) to the Agreement to set forth the guaranteed maximum price, as well as the date by which Whiting-Turner is to achieve Substantial Completion (as defined in the Agreement). Under the Amendment, the guaranteed maximum price to be paid by Krystal is $78,870,514, subject to certain additions and deductions by change orders as provided in the Agreement, and the date of Substantial Completion of Whiting-Turner’s work under the Agreement is March 30, 2022. Whiting-Turner’s work under the Agreement represents a portion of the work necessary to complete construction of the ASTRA facility and, therefore the date of Substantial Completion of Whiting-Turner’s work under the Agreement does not equate to the date of completion of the Project. The guaranteed maximum price under the Agreement constitutes only a portion of the total estimated cost of building and equipping ASTRA. Krystal provides periodic updated estimates of the total estimated non-cancelable costs on a quarterly basis in its filings on Form 10-Q. The foregoing description of the Amendment is qualified in its entirety by reference to the complete terms and conditions of the Amendment. A copy of the Amendment is attached hereto as Exhibit 10.1 and incorporated by reference herein.
§ 1.2 GUARANTEED MAXIMUM PRICE § 1.2.1 The Contract Sum is guaranteed by the Contractor not to exceed a maximum amount (the "Guaranteed Maximum Price") established in the GMP Amendment, subject to additions and deductions by Change Order as provided in the Contract Documents. Costs which would cause the Guaranteed Maximum Price to be exceeded shall be paid by the Contractor without reimbursement by the Owner. Contractor acknowledges and agrees that the Guaranteed Maximum Price includes all inflationary costs and adjustments, and labor and material escalations, in connection with the performance of the Work so long as Owner satisfies its express obligations under the Schedule and timely issues the NTP . The Guaranteed Maximum Price shall not be adjusted due to any such inflationary costs and/or escalation events so long as Owner satisfies its express obligations under the Schedule and timely issues the NTP. There shall be no shared savings clause in this Agreement. All savings will accrue to the Owner.
§ 1.2.1.1 At a time to be mutually agreed upon by the Owner and the Contractor, the Contractor shall prepare a Guaranteed Maximum Price proposal for the Owner’s review and written acceptance. The Guaranteed Maximum Price in the proposal shall be the sum of the Contractor’s reasonable estimate of the Cost of the Work, including contingencies described in Section 5.2.1.4, and the Contractor’s Fee.
§ 1.2.1.3 The Contractor shall include with the Guaranteed Maximum Price proposal a written statement of its basis, which shall include the following: .1 A list of the Drawings and Specifications, including all Addenda thereto, and the Conditions of the Contract; .2 A list of the clarifications and assumptions made by the Contractor in the preparation of the Guaranteed Maximum Price proposal, including assumptions to supplement the information provided by the Owner and contained in the Drawings and Specifications; .3 A statement of the proposed Guaranteed Maximum Price, including a statement of the estimated Cost of the Work organized by trade categories or systems, allowances, contingency, and the Contractor’s Fee; .4 The anticipated date of Substantial Completion upon which the proposed Guaranteed Maximum Price is based (i.e., the proposed “Substantial Completion Deadline”); and .5 A date by which the Owner must accept or reject the Guaranteed Maximum Price, which shall not be less than 30 days from the date of the Guaranteed Maximum Price proposal (it being agreed if Owner does not accept or reject the Guaranteed Maximum Price proposal in writing, it shall be deemed rejected).
Lycopodium was awarded the guaranteed maximum price contract for the engineering, procurement and construction of the gold processing facility. As of December 31, 2021 engineering activities were 55 percent complete, procurement activities 44 percent complete and construction activities are on-track to commence early in the second quarter of 2022. Of note, the SAG mill purchase order has been placed and remains on-track to be delivered to site in the third quarter of 2022. Detailed engineering for the SAG mill is complete and manufacturing of core components such as shell, heads and trunnions and gear and pinion has commenced.
A.BKRF and CTCI entered into that certain Turnkey Agreement with Guaranteed Maximum Price for the Engineering Procurement and Construction of the Bakersfield Renewable Fuels Project dated as of May 18, 2021, and as amended from time to time thereafter (“EPC Agreement”) whereby CTCI contracted to act as the general contractor for engineering, procurement and construction of the Bakersfield Renewable Fuels Project (the “Project”);
On September 7, 2023, RPT 1109 Commerce Corner, LLC ("RPT 1109 Commerce"), a wholly-owned indirect subsidiary of RREEF Property Trust, Inc. (the "Company"), entered into a guaranteed maximum price contract to expand the Company's property located at 1109 Commerce Boulevard, Logan Township, New Jersey ("Commerce Corner") by approximately 141,000 square feet (the "Commerce Expansion").
The guaranteed maximum price payable to the General Contractor under the Construction Contract for the construction of the Base Building Improvements is $83,561,648.
On February 27, 2020, T. Marzetti Company (“T. Marzetti”), a wholly-owned subsidiary of Lancaster Colony Corporation, entered into a Design/Build Agreement (the “Agreement”) with Gray Construction, Inc. (“Gray”) pursuant to which Gray will design, coordinate, and build an approximate 194,000 square foot addition onto T. Marzetti’s existing facility in Hart County, Kentucky (the “Project”). This Project will include additional processing, packaging, warehouse, employee facilities, and utilities to double production capabilities of the current operations. Subject to certain conditions in the Agreement, T. Marzetti will pay Gray no more than the guaranteed maximum price of approximately $80 million for the Project. The Agreement contains other terms and conditions that are customary for this type of project. The Project is expected to be completed by July 2021.
On June 29, 2023, AquaBounty Farms Ohio LLC (“AQB Ohio”), an Ohio limited liability company and a wholly-owned subsidiary of AquaBounty Technologies, Inc. (the “Company”), entered into an Agreement For Construction Management Services (the “Agreement) with Gilbane Building Company (“Gilbane”), effective June 29, 2023, pursuant to which Gilbane will manage the construction of AQB Ohio’s land-based aquaculture facility in Pioneer, Ohio (the “Project”), on a Guaranteed Maximum Price (“GMP”) basis following the handover of such responsibilities from the initial construction firm as of June 30, 2023. Subject to certain conditions in this Agreement, AQB Ohio will pay Gilbane fees as set forth in each GMP, which shall be agreed upon at future dates, but which shall include (1) the costs of the construction, (2) Gilbane’s fee, (3) general conditions costs, (4) workers’ compensation and liability insurance costs, (5) sub-guard insurance, and (6) construction contingency. The Agreement is subject to customary undertakings, covenants, obligations, rights, remedies, and conditions.
A Guaranteed Maximum Price (GMP) is a cost-type contract used predominantly in the construction industry. Under a GMP contract, a contractor agrees to complete a project for a price that will not exceed a set maximum. If the project costs less than the maximum price, any savings might be shared with the owner, depending on the terms of the contract. Conversely, if the costs exceed the GMP, the contractor is responsible for covering the additional expenses unless there are legitimate change orders.
You should consider using a GMP contract in the following situations:
Writing a GMP involves several critical steps:
GMP provisions are typically found in:
GMP is a flexible solution in contract management, offering financial control and accountability, but it requires careful creation and management to ensure success on complex undertakings.
Try our AI contract analysis and extract important clauses and information from existing contracts.
< <
Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
A holdover clause in a contract specifies the conditions and obligations of the parties if a tenant or lessee continues to occupy the property beyond the expiration of the lease term. It typically outlines the changes in rental terms, such as an increase in rent, and the landlord's rights and remedies during the holdover period.
HSSE (Health, Safety, Security, and Environmental) standards are contractual clauses that set out the specific requirements and practices that parties must adhere to in order to ensure a safe, secure, and environmentally responsible working environment. These standards are designed to mitigate risks, protect personnel and assets, and ensure compliance with relevant laws and regulations.
The ICC arbitration clause refers to an agreement between parties to resolve their disputes through arbitration under the rules of the International Chamber of Commerce (ICC). This clause specifies that any disagreements will be handled by an impartial tribunal, ensuring a binding and enforceable resolution while providing a streamlined alternative to court litigation.
Fill out the form and we will get in touch with you to give you a personal, customized demo of fynk.
Greetings!
I'm Markus, co-founder of fynk. After you've submitted the form, I'll swiftly get in touch with you.
Also, right after you submit your details, you can pick a time that works best for you for our meeting.
