In this article, our Illinois construction dispute attorneys explain what guaranteed maximum price construction contracts are and how they're created and implemented.
Important questions raised in this article are:
- What is a Guaranteed Maximum Price?
- What is a Schedule of Values in a GMP Construction Contract?
- What is a Contingency in a GMP Construction Contract?
- What are Allowances in a Construction Contract?
- What are Change Orders in a Construction Contract?
Among the most common price structures is for the owner to pay the contractor the cost of work plus the contractor’s fee. Often, in a “cost-plus-fee” contract, the contractor’s fee is calculated as a certain percentage of the actual costs associated with the work, including labor, materials, storage, and transportation. A common way to mitigate the owner’s risk and provide a level of certainty as to the cost of the project is for the contractor to set a guaranteed maximum price.
Read the entire article by our Illinois construction dispute attorneys