Avoiding the Pitfalls of GMP Contracting – OnDemand


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Understand the differences and unique risks of using GMP contracts.

As owners search for project delivery systems that reduce the duration from project conception to project completion, one of the most common approaches has included the use of guaranteed maximum price, or GMP, contracts. However, as the use of these contract formats has proliferated so have disputes that strongly suggest that the parties using them do not fully understand the differences between GMP contracts and the contracts that the users are used to working under, or the risks that are inherent to this delivery system. This topic will highlight basic differences and alert you to the unique risks of using this format, and share information from many years of hands-on experience in the negotiation, drafting and administration of GMP contracts. Topics will include, in-depth description and analysis of the advantages and disadvantages of this contracting format, the four phases of work that are typical when working under a GMP format, the components of a GMP and why it is so important to fully understand how each is defined, and the conditions that apply to the payment of each component. You will learn what to do and not do during each of these phases, including administrative burdens placed on each of the parties when using this contracting format, what a change is under a GMP contract, and how it differs from changes under other contracts.

Learning Objectives

  • You will be able to review what components make up the GMP and how each is administered as work proceeds.
  • You will be able to describe the four phases of work that are typical when working under a GMP format.
  • You will be able to explain how the work done during each phase can affect the likelihood of success.
  • You will be able to identify the differences between GMP contracts and other contracts.