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) where the contractor is compensated for actual costs incurred plus a fixed fee subject to a ceiling price. The contractor is responsible for cost overruns, unless the GMP has been increased via formal change order (only as a result of additional scope from the client, not price overruns, errors, or omissions). Savings resulting from cost underruns are returned to the owner.

This is different from a fixed-price contract, also known as stipulated price contract [1] or lump-sum contract, where 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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