Guaranteed Maximum Price (GMP)
A cost ceiling a construction manager or contractor guarantees under a [[concept-cost-plus-contract|cost-plus contract]]. The owner pays actual costs plus a fee up to the GMP, and the contractor absorbs costs beyond it, subject to approved changes, most commonly paired with [[concept-cm-at-risk|CM at Risk]] delivery.
Why it matters
A GMP set before design is actually complete is really a guess dressed up as a guarantee, and any real gaps left in the design at that point become the contractor's financial problem the moment the GMP locks in.
On a real project
A CM at Risk project's design reaches roughly sixty percent completion before the GMP is set, giving the contractor enough real detail to price the remaining unknowns accurately rather than guessing at what's still undesigned.
Who this matters most to
A Preconstruction Manager builds the cost estimate the GMP is based on, while a Cost Engineer tracks actual costs against it once construction starts.
Where this goes wrong
A CM at Risk project's GMP is set before design is fully complete, and unresolved design gaps turn into cost overruns the CM has to absorb once the GMP is locked in, since the added scope falls outside what the contingency and change order process was ever meant to cover.