Will the contractor assume the risk of the total cost exceeding a maximum price?
The first element of a guaranteed maximum price contract is that it is a contract containing an agreement that the price will not exceed a specified maximum amount. That price is based upon a process estimate (often design build), instead of a clearly defined set of drawings and schedule. If the project is delivered for less than the GMP, the savings are shared in some way. The unique aspect is that the contract contains words that say that the general contractor will charge no more than this to complete a specific project. This video reviews attributions of a guaranteed maximum price contract.
Scott R. Halloin
Halloin Law Group
- Shareholder with Halloin Law Group
- For 28 years his practice has focused on complex commercial and residential construction disputes, including contract disputes, code compliance, delay claims and design disputes
- Regular speaker on the Actual and Discrete Cost Method, Total Cost Method, Modified Total Cost Method, and modifications to the Total Cost Method
- Wrote a Wisconsin Construction Design Law, which was included in the American Bar Association's State-by-State Guide to Construction and Design Law
- Regular speaker at continuing legal education seminars on construction issues, including “Guaranteed Maximum Price Contracts,” “Managing Construction Projects,” “AIA Construction Contracts,” and “Managing Construction Claims”
- Licensed to practice in Wisconsin and Illinois
- J.D. degree, Northwestern University School of Law; B.A. degree, magna cum laude, Lawrence University
- Can be contacted at 414-732-2424 or [email protected]
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