# What is a guaranteed maximum price contract?

> A GMP caps what an owner pays for a defined scope and returns savings. Here is what is inside one and what can move it.

This is the plain-text version of https://blackstone.build/commercial/journal/what-is-a-guaranteed-maximum-price-contract. To cite or link, use that page.

Delivery methods. February 10, 2026.

## The short answer

A guaranteed maximum price (GMP) contract caps what an owner pays for a defined scope of work. The contractor is paid the actual cost of the work plus a fee, up to the cap. Costs above the cap are the contractor’s, and savings below it return to the owner or are shared, as the contract states.

## What is inside a GMP?

Five parts: the cost of the work, which is mostly subcontracts and materials; general conditions, which are the cost of running the site; the contractor’s fee; a contingency for the contractor’s own risks; and allowances for items not yet selected.

Each part should be visible as its own line.

## When is the price set?

A GMP can be set at any point in design. Set early, it carries more contingency and a longer list of assumptions. Set once the drawings are well developed, it is tighter because more of it rests on real bids.

## What can move a GMP?

The cap covers a defined scope. It moves when the owner changes that scope, when conditions are found that nobody could have seen, or when an allowance item costs more than the allowance.

Read the list of assumptions and clarifications attached to the GMP as carefully as the number. That list is where the scope is defined.

## What does open book mean?

Under a GMP the owner is entitled to see the costs. That means the subcontractor bids, the invoices and the payroll behind general conditions. You can check that what you are billed is what the work cost.

## How is it different from a lump sum?

A lump sum fixes the price, and the contractor keeps any savings. You do not see the costs. A GMP fixes the ceiling, shows you the costs and returns savings. Owners choose a GMP when they want a price before design is finished and want to stay in the decisions.

We build under GMP, lump sum and design-build contracts. We welcome alternative delivery methods because they speed projects up and take risk out of them.

## Common questions

### Who owns the contingency?

The contractor’s contingency covers the contractor’s risks inside the GMP, and unused contingency is normally returned as savings. An owner’s contingency for scope changes sits outside the GMP.

### Is a GMP only for large projects?

No. It suits any project where the owner wants a ceiling on cost before the drawings are complete.

### What should I ask for before signing?

The assumptions and clarifications, the allowance list, the schedule, the fee, the markup on changes and how savings are split.

## The project behind this post

- [Synovis](https://blackstone.build/text/commercial/projects/synovis): Office & Light Manufacturing. Medical Device Office, Training and Assembly Space. Birmingham, AL.

From the [Commercial Journal](https://blackstone.build/text/commercial/journal).