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Guaranteed maximum price contract template 2025

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The document is a Guaranteed Maximum Price (GMP) Addendum to an Agreement for Construction Management at Risk Services between Manatee County and Halfacre Construction Company. It establishes a GMP of $1,940,431 for the construction of the Manatee County Lifeguard Stations, detailing the cost breakdown, contract time, and conditions regarding liquidated damages for delays. The addendum serves to supplement the original agreement and outlines various contract documents and insurance requirements.

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What are the disadvantages of GMP contracts?

The contractor assumes a great deal of risk on GMP projects. Any miscalculations or unknown conditions that lead to cost overruns can dip into contractor profits. The project must be extremely well-defined for a GMP contract to work for the contractor. Scope changes can lead to disputes over additional expenses.

What is maximum guaranteed contract?

A lump-sum contract is when the price will be for a set amount regardless of what the contractors actual costs may be. In contrast, with a GMP contract, the owner pays the contractors actual costs plus the profit. The project costs are capped at the price maximum.

What are the disadvantages of GMP?

Another disadvantage of GMP construction contracts is that there is a possibility of disputes arising. The dispute may be about the project costs falling under the contract, especially for uncertain costs. Also, there can be a dispute for change orders as the contractor is the one who accounts for all project costs.

What are the disadvantages of cost plus percentage contract?

They also come with drawbacks, including uncertain pricing, a higher administrative workload, and a greater risk of disputes. Understanding the pros and cons is essential for both project owners and general contractors.

How does a GMP contract work?

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) such that the contractor is compensated for actual costs incurred plus a fixed fee, which is limited to a maximum price.

What are the disadvantages of a lump sum contract?

While lump sum contracts benefit from simplicity, they also present risks to both owners and contractors. Contractors may be incentivized to cut corners to stay under budget. May be on the hook for added costs due to change orders. Inaccurate estimating could cut into profit margin.

What are the risks of GMP contracts?

High Contractor Risk and Financial Pressure One of the biggest drawbacks of a GMP contract is the significant financial risk placed on the contractor. If actual construction costs exceed the agreed-upon guaranteed maximum price, the contractor must absorb the additional expenses, cutting into their profits.

Guaranteed maximum price contract template 2025

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What are the disadvantages of GMP contracts?

What is maximum guaranteed contract?

What are the disadvantages of GMP?

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How does a GMP contract work?

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What are the disadvantages of a lump sum contract?

What are the risks of GMP contracts?

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Guaranteed maximum price contract template 2025

Here's how it works

The best way to modify Guaranteed maximum price contract template online

Complete this form in 5 minutes or less

Got questions?

What are the disadvantages of GMP contracts?

What is maximum guaranteed contract?

What are the disadvantages of GMP?

What are the disadvantages of cost plus percentage contract?

How does a GMP contract work?

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People also ask

What are the disadvantages of a lump sum contract?

What are the risks of GMP contracts?

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