Fifteen questions to ask before signing a GMP

Ask them in this order. A guaranteed maximum price is a ceiling over a defined scope on a defined date, and most of the questions to ask before signing a GMP are really one question asked fifteen ways: what is defined, and what is still open? The open parts are where the money moves.

What you are actually holding

The package that lands on your desk is rarely one document. There is an amendment that names the number and the date. There is a schedule of values that breaks the number into lines. There is a list of qualifications, assumptions, exclusions and allowances, usually the shortest document in the set and reliably the most expensive one. There is a schedule. There is a drawing and specification set, identified by date and revision.

The number on the front page is the part most people read closely. It is also the part least likely to change, because the four mechanisms that move your cost do not touch it.

A guaranteed maximum price is a ceiling over the scope defined on the day it was set. That definition lives in the drawings, the specification and the qualifications page, not in the amendment. When the definition moves, the ceiling stays where it is and your cost moves anyway, through change orders.

So the questions below are not about the number. They are about the definition behind it, and about who decides when that definition has changed.

Four ways cost moves without the ceiling moving

Allowances

An allowance is a placeholder for work that is inside the scope but not yet priced. The figure carried is an estimate, not a bid. When the real price arrives and it is higher, the difference is a change order against your money. An allowance is a promise to decide later, and later costs more than now.

Exclusions and qualifications

These sit on one page near the back. Each line names something the price does not cover. Some are reasonable, such as abatement on a building nobody has surveyed. Some are not, such as an exclusion for work clearly drawn on the plans. Every exclusion is a change order waiting for a trigger, which is why the review of scope gaps between trade packages starts on that page.

Trade packages not yet bought out

A GMP signed before buyout is a price built partly from estimates. The gap between the estimate and the award is the buyout gap. When it falls the owner's way, the savings may be shared or may not, depending on one clause. When it falls the other way, contingency absorbs it, until it cannot.

The change mechanism itself

How a change is priced, what markup applies, whose rates govern, and how many days you have to respond. These terms are negotiable before signature and fixed after it. Fifteen percent markup instead of ten, on a job that runs eight percent in changes, is not a rounding difference, and reading the change and markup terms before signature is the only cheap moment to fix them.

None of these four moves the guaranteed maximum price. All four move what you pay.

Where the answers live

Every question below has a document behind it. When a question cannot be answered from the documents you were handed, that absence is itself the answer.

The qualifications, assumptions and exclusions page answers what is not covered. Read it before the amendment, not after.

The schedule of values answers how the number is built. Look for lines carried as allowances, lines sitting on round figures, and lines that are large relative to the work they describe.

The schedule answers whether the completion date is a plan or a hope. Look for long lead items, for owner decisions on the critical path, and for how much float sits between the last activity and the date you were promised. That is the ground covered by the schedule and procurement review.

The drawing and specification set, identified by date and revision, answers what was actually priced. A GMP references one specific set. Anything issued after that date is a change unless the amendment says otherwise.

The contract form answers who carries what. On a CM at risk job this is usually AIA A133 with A102, or a ConsensusDocs equivalent, and it is usually amended. The amendments matter more than the form.

The general conditions and general requirements answer what the general contractor charges for running the job rather than building it. These are separate line items and they are frequently confused, sometimes by accident.

You do not need to be a builder to ask any of this. You need the documents side by side, and somebody reading them against each other rather than one at a time.

A worked example

A guaranteed maximum price lands at $48,000,000 on a mixed-use building. The qualifications page lists eleven allowances totaling $2,880,000, which is six percent of the price. Four of them cover work that is drawn but not specified: the facade sealant system, the lobby stone, the elevator finishes and the site lighting.

Contractor contingency is $1,440,000, three percent.

The allowances land, on average, twenty percent above the figures carried. That is $576,000 of change orders. Nothing has gone wrong. Nobody has made a mistake. The work was always inside the scope and the placeholders were always estimates.

That $576,000 is forty percent of the contingency, spent before the first unforeseen condition appears.

A review does not reprice any of that work. It reads eleven allowance descriptions against the drawings, asks which ones carry a resolution date, and asks who approves the figure when it lands. Three of the eleven turn out to have no date at all.

The fifteen questions

Four groups. Each question has a document behind it.

The price

1. Which lines are allowances, and what is the resolution date for each one?
2. Which trade packages are bought out, and which are still estimates?
3. What is the contractor contingency, who authorizes a draw, and what may it be spent on?
4. Is there owner contingency, and is it held separately from the contractor's?
5. What happens to unspent contingency at closeout?

The scope

6. Which drawing and specification set, by date and revision, is this price based on?
7. What is on the exclusions list that is also on the drawings?
8. Where does the base building stop and the fit out begin?
9. Which existing conditions were assumed rather than surveyed?
10. What is excluded that a reasonable reader would assume is included?

The schedule

11. Which long lead items have been ordered, and which have not?
12. Which owner decisions sit on the critical path, and by what date?
13. How much float is there, and who owns it?

The change mechanism

14. What markup applies to a change order, to whose costs, and at what rates?
15. How many days do you have to respond to a change order or a claim, and what happens when you miss?

When the answer to any of these is a conversation rather than a document, write it down and attach it to the amendment. A verbal assurance survives exactly as long as the person who gave it.

What we do

We read the package from the owner's side and write down what it does not cover. Every finding cites the page it came from and carries the money behind it, ranked by exposure. The Pre-GMP Readiness Review takes the price and the qualifications page. Three more modules take the schedule, the scope gaps and the change mechanism. One call at the end, before your signing date, and no presentation deck.

Questions people ask