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) such that the contractor is compensated for actual costs incurred plus a fixed fee, limited to a maximum price. The contractor is responsible for cost overruns greater than the guaranteed maximum price, unless the GMP has been increased by a formal change order (only as a result of additional scope from the client, not price overruns, errors, or omissions). Savings resulting from unexpectedly low costs are returned to the client.
This is different from a
fixed-price contract A fixed-price contract is a type of contract such that the payment amount does not depend on resources used or time expended by the contractor. This is opposed to a cost-plus contract, which is intended to cover the costs incurred by the contractor ...
, also known as ''stipulated price contract''
[Pawson, O.]
"Stipulated Price Contract"
''Canadian Consulting Engineer'', accessed 14 December 2019 or ''lump-sum contract'', whereby cost savings are typically retained by the contractor and essentially become additional
profit
Profit may refer to:
Business and law
* Profit (accounting), the difference between the purchase price and the costs of bringing to market
* Profit (economics), normal profit and economic profit
* Profit (real property), a nonpossessory inter ...
s.
See also
*
Time and materials Time and materials (T&M) is a standard phrase in a contract for construction, product development or any other piece of work in which the employer agrees to pay the contractor
A contractor is a person or company that performs work on a contract b ...
References
Pricing
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