In this video, our Champaign County construction attorneys explain guaranteed maximum price contracts in construction, including allowances, contingencies, schedules of values, and change orders in GMP contracts. In a guaranteed maximum price contract, the contractor will charge the owner the cost of the labor and materials plus a percentage of that cost for profit. The total cost to the owner may be less than the guaranteed maximum price, but it will not exceed it. Unlike a lump sum contract wherein a contractor is paid a flat fee for the work, the guaranteed maximum price contract allows the owner to potentially save money if the project ends up costing less than estimated.