A Cost Plus with Guaranteed Maximum Price (GMP) Contract is one of the Reimbursable Contract types, while the traditional cost-plus agreement does not have a fixed budget, an owner and contractor often agree to cap the price once the project design and engineering is substantially complete. Under a GMP Agreement, a contractor is responsible for the difference of the exceeding capped amount, and if the total cost of the project is below the capped cost, the owner and contractor often agree to a shared saving benefit.
Related Definitions in the Project: The Project Contract
