Missing procurement packages in a GMP are the scope that has been priced but not bought. Every one of them can still move, and counting them is a twenty minute exercise that changes how the whole number should be read.
Why a signed price still has unbought work in it
A guaranteed maximum price is agreed at a point in the design when construction can sensibly start. On a construction manager at risk job that is usually somewhere between sixty and ninety percent design completion.
At that point some trades can be competitively bid with confidence, because their scope is fully drawn. Site work, concrete, structure and enclosure are usually in that group.
Others cannot. Finishes depend on selections that have not been made. Equipment depends on specifications still being written. Specialty systems depend on design that follows the equipment. Those packages are carried at an estimate.
So a signed price is a blend. Part of it is a set of firm subcontract commitments and part of it is a forecast, and the two are presented identically in a schedule of values.
The share that is forecast is the part that can still move, and it is the single most useful thing to know about a number before you commit to it.
How to count the missing procurement packages in a GMP
One document does it. Ask for the procurement or buyout log, which every competent contractor maintains for its own purchasing, and which is rarely volunteered because nobody asks.
It lists every trade package with its status. Read three columns and the exercise is finished.
Status. Awarded, meaning an executed subcontract exists. Bid, meaning prices are in hand but nothing is signed. Estimated, meaning a number was carried without a current bid behind it.
Value. The amount carried in the contract for that package.
Award date. When the subcontract is planned to be executed, which matters for the long lead items behind it.
Add the values in the awarded rows and divide by the contract value. That percentage is the settled share. Everything else can move.
If the log does not exist, that absence is the finding, and it is a larger one than any number in it would have been. A contractor buying twenty four packages without a log is buying them from memory.
Which unbought packages actually matter
The total is a blunt measure. Four characteristics separate a package that will move from one that will not.
Design completeness. A package priced from a drawing set that is still changing will be rebid against a different scope. The variance follows the design rather than the market.
Market depth. Three qualified bidders in the region produces a different outcome from one. On specialty systems the list is frequently short, and a short list prices differently.
Lead time behind it. A package with a fourteen month equipment delivery behind it has an award date that cannot slip, which removes your ability to wait for a better price.
Share of the total. A mechanical package at eighteen percent of the contract value deserves more attention than nine finish packages at one percent each, even though there are nine of them.
Rank the unbought list by those four and the top three usually account for most of the movement. Everything below that is noise you can stop watching.
What an owner can do about it
More than most owners assume, because the period between signature and award is the one time the price is still being tested against a market.
Fix the selections that are holding packages open. Most finish packages are unbought because a decision has not been made. Those decisions are yours and the calendar is yours.
Require the bid tabulations on the largest packages. Not to direct the selection, but because a spread of thirty percent between bidders says the scope description is ambiguous, which is a finding you can act on before the award rather than after.
Agree the treatment of overruns in advance. Which fund absorbs a package bought above its carried figure should be settled at signature, not discovered in month eleven.
Watch the pattern. Five packages into buyout, the direction is usually established. Use it to rebuild your open exposure rather than waiting for the total.
The mechanics of that gain and who ends up with it sit in the GMP buyout process and what the gap tells you.
A worked example
Illustrative figures. Not taken from any client project and not a quotation.
A $44 million guaranteed maximum price on a senior living project. The procurement log shows twenty one packages, of which nine are awarded.
Awarded value $18.5 million, so 42 percent of the contract is settled and 58 percent is an estimate.
Ranked by the four characteristics, three packages carry most of the exposure. Mechanical at $6.8 million, priced from a seventy percent design set, two qualified bidders in the region. Kitchen and laundry equipment at $2.1 million, priced against a specification superseded at the last issue. Casework at $1.9 million, awaiting an owner selection that has been outstanding for four months.
Reasonable range on those three: $10.8 million carried against $11.3 million to $12.6 million realistic.
The other eighteen packages, totaling $14.7 million of unbought value, are likely to move by a few hundred thousand in either direction. The owner now knows which three conversations matter and which eighteen do not.
What to do before you sign
- Require the procurement log as a condition of execution, with status, value and award date per package.
- Calculate the awarded share as a percentage and a dollar figure and write it into your own budget notes.
- Rank the unbought packages by design completeness, market depth, lead time and share of total.
- Name the owner decision behind every package that is open because of a selection.
- Put a date on each of those decisions and put it in front of whoever has to make it.
- Agree in writing which fund absorbs a package bought above its carried figure.
- Require the log updated monthly, with variance against the carried figure as each award lands.
Items four and five are the ones entirely within your control and the ones most often left informal. A package that has been open for four months waiting on a finish selection is an exposure the owner created and can close in an afternoon.
Item one deserves to be a condition rather than a request, because the difference in how it is received before and after signature is considerable. A contractor asked for the log during negotiation produces it, since the log exists and refusing looks worse than sharing. The same request in month three arrives as a suggestion that somebody is being watched.
Where a package is open for a reason nobody can name, that is worth a second question. Packages usually stay unbought for one of four reasons: the design is not finished, a selection is outstanding, the market is thin, or the award date is deliberately late to catch a better price. Three of those four are fine and one of them is a decision the owner should have been part of. The scoping options for this reading are in the review packages.
What we do
We read the procurement log against the drawing set and the schedule, and produce the unbought position as a ranked list with a dollar range on the top three. Each one names the reason it is open, the owner decision behind it if there is one, and the date the award has to happen. It is a reading rather than a procurement service, and we do not contact any bidder. The work sits in the schedule and procurement risk review.
Questions people ask
Is it normal for a GMP to have unbought work in it?
Yes, and a job that waited for every package to be competitively bid would start much later and cost more in carrying time. What is not normal is for the unbought share to be undisclosed, because that share is the part of the price that can still move in either direction.
What if the contractor will not share the procurement log?
Treat the refusal as the finding. The log exists for the contractor own purchasing and producing it costs nothing. Making it a condition of execution is a reasonable request before signature and an awkward one afterwards, which is a good reason to ask early.
Which unbought packages should I worry about?
The ones priced from an incomplete design, the ones with a short bidder list, the ones with long lead equipment behind them, and the ones that represent a large share of the total. On most jobs three packages account for most of the remaining movement and the rest is noise.
This is general information about construction contracts and is not legal advice.