Guaranteed maximum price
A guaranteed maximum price contract is a cost-type contract where the contractor is compensated for actual costs incurred plus a fixed fee subject to a ceiling price. The contractor is responsible for cost overruns, unless the GMP has been increased via formal change order. Savings resulting from cost underruns are returned to the owner.
This is different from a fixed-price contract, also known as stipulated price contract or lump-sum contract, where cost savings are typically retained by the contractor and essentially become additional profits.
