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Guaranteed Maximum Price

Based on the information from our textbook and the article, “A Framework for Guaranteed Maximum Price and Contingency Development for Integrated Delivery of Transportation Projects”, Guaranteed Maximum Price is a type of contractual reimbursement that is associated with CM at Risk and sometimes Design-Build delivery methods. Using the information from the textbook, the article, and any experience (including examples of your experience) and knowledge and other resources that you and your group possess, please answer the following questions:

1. What is the purpose of developing a guaranteed maximum price?

2. Why is the direct project cost portion of the GMP the largest portion, but the least difficult to negotiate?

3. Discuss the differences between “Lump Sum GMP” and “Progressive GMP”. In what situations would you use Lump Sum GMP? In what situations would you use Progressive GMP?

 

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