In this article, our Peoria construction lawyers explain how Guaranteed Maximum Price construction contracts work.
In Guaranteed Maximum Price Contracts, also known as GMP contracts, the contractor can charge for its services in a variety of ways, including time plus materials, or a percentage of the overhead as profit. However, the total price of the contract is limited by the guaranteed maximum price. If the contractor's final charges come in below the guaranteed maximum price the owner typically gets the savings. The contractor bears the risk of the price exceeding the guaranteed maximum price. Our Peoria construction lawyers explain how allowances, change orders, contingencies, and schedules of values operate in guaranteed maximum price construction contracts.