Guaranteed Maximum Price (GMP)

A guaranteed maximum price (GMP) is a contract provision that sets a ceiling on the total amount an owner will pay. The contractor is reimbursed for actual costs plus a fee, but any cost above the guaranteed maximum is the contractor's responsibility.

It is common on cost-plus and construction-management contracts, combining the flexibility of cost reimbursement with the owner's protection of a hard cap. Savings below the GMP are often shared between owner and contractor.

Setting a GMP requires a credible estimate of the full scope, since the contractor is betting they can deliver under the cap. Building that estimate on an accurate takeoff is what makes the number defensible — the kind of grounding Quotr provides.

For owners, a GMP caps exposure while keeping cost transparency. For contractors, it transfers overrun risk, so the estimate behind the cap has to be sound.