- 1 What is GMP in project management?
- 2 How does GMP contract work?
- 3 What is a GMP job?
- 4 What is the difference between GMP and lump sum?
- 5 What are the 3 types of contracts?
- 6 What is a GMP amendment?
- 7 What is a guaranteed maximum price GMP contract?
- 8 What is a fixed fee contract?
- 9 What is a CM at Risk Contract?
- 10 What is a stipulated sum?
- 11 What is unit rate contract?
- 12 What does GMP stand for?
- 13 When would you use a lump sum contract?
- 14 What are the three most commonly used types of construction contracts?
- 15 What is the difference between fixed price and lump sum contract?
What is GMP in project management?
A GMP, or a Guaranteed Maximum Price, is one of the most common pricing structures used by construction contractors. Under a GMP contract, the contractor is compensated for actual costs incurred, plus a fixed fee which covers risk.
How does GMP contract work?
A guaranteed maximum price contract sets a limit, or maximum price, that the customer will have to pay their contractor or subcontractor, regardless of the actual costs incurred. GMP contracts are attractive to customers because they shift a significant amount of risk to the party performing work.
What is a GMP job?
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.
What is the difference between GMP and lump sum?
A Lump Sum contract price will always be lower than the Guaranteed Maximum Price in a GMP/Cost-Plus contract because the GMP/cost-Plus contract will include a construction contingency (typically 5% plus or minus that is not included in a Lump Sum contract amount.
What are the 3 types of contracts?
So let’s look at those three contract types in a bit more detail.
- Fixed price contracts. With a fixed price contract the buyer (that’s you) doesn’t take on much risk.
- Cost-reimbursable contracts. With a cost-reimbursable contract you pay the vendor for the actual cost of the work.
- Time and materials contracts.
What is a GMP amendment?
GMP Amendment means the amendment to the Construction Contract establishing the terms and conditions on which the Prime Contractor has agreed to construct the Project for a price not to exceed the GMP with Substantial Completion not later than the Substantial Completion Date.
What is a guaranteed maximum price GMP contract?
A guaranteed maximum price contract is a hybrid of a cost reimbursable contract and a fixed lump sum. A contractor is reimbursed the costs that it actually incurs when they are incurred, which assists with cashflow. However, unlike an alliance, those costs are capped at the Guaranteed Maximum Price or the GMP.
What is a fixed fee contract?
A fixed-price contract is a type of contract where the payment amount does not depend on resources used or time expended. This is opposed to a cost-plus contract, which is intended to cover the costs with additional profit made.
What is a CM at Risk Contract?
CM at-risk (CMAR) is a delivery method which entails a commitment by the construction manager to deliver the project within a Guaranteed Maximum Price (GMP), in most cases. CM at-risk is a cost effective and time conscious alternative to the traditional design-bid-build process.
What is a stipulated sum?
A lump sum contract, sometimes called stipulated sum, is the most basic form of agreement between a contractor and a customer. A lump sum contract or a stipulated sum contract will require that the contractor agree to provide specified services for a stipulated or fixed price.
What is unit rate contract?
Under a unit price contract, a contractor is paid for the actual quantity of each line item performed as measured in the field during construction. Each unit price includes all labor, material, equipment, overhead, and profit attributable to that scope of work.
What does GMP stand for?
Good manufacturing practice (GMP) is a system for ensuring that products are consistently produced and controlled according to quality standards. It is designed to minimize the risks involved in any pharmaceutical production that cannot be eliminated through testing the final product.
When would you use a lump sum contract?
When to Use This Type of Contract
A lump–sum contract is a great contract agreement to be used if the requested work is well-defined and construction drawings are completed. The lump–sum agreement will reduce owner risk, and the contractor has greater control over profit expectations.
What are the three most commonly used types of construction contracts?
Three Common Construction Contracts
- FIXED PRICE. Fixed price construction contracts, also commonly referred to as “lump sum” or “stipulated sum” contracts, are the most common types of construction contracts.
- COST PLUS.
- GUARANTEED MAXIMUM PRICE.
What is the difference between fixed price and lump sum contract?
Under a lump sum contract, a single ‘lump sum‘ price for all the works is agreed before the works begin. It is defined as a fixed price contract, where the contractors agree to execute the work for a stated total sum of money.