What we read
The qualifications page, the allowance schedule, the procurement log and the change order terms. Four documents, usually under forty pages, and they describe more of your exposure than the whole financial model does.
Home Who we work for Developers
Developers on a guaranteed maximum price
You carry the cost of every gap in the price. The contractor built the number up, and every allowance that cannot stretch lands on your equity rather than on theirs.
The position you are in
The number was built by the party you are buying it from
Your contractor assembled the number and is asking you to accept it as a ceiling. That is a reasonable request and it is also a request to accept a definition of scope you did not write.
Every allowance that lands above the figure carried, every exclusion nobody added up and every qualification that moves scope back to you arrives on your balance sheet. The guarantee is real. Its boundary was drafted by the party giving it.
The arithmetic is unkind to the sponsor. A cost increase of two or three percent on total project cost can remove most of the promote, because the promote sits on the thin slice above a preferred return rather than on the whole stack.
What you usually ask us
The four questions we hear most
Every one of them is answerable from documents you already hold, which is why the reading runs without asking the contractor for anything.
- Is this number defensible to my equity partner?
- Which three items would you reopen, and in what order?
- What does the contingency actually cover, and who keeps what is left?
- How much of the price is bought, and how much is still an estimate?
How it works for you
What we read, and what you get
What you get
A register of open exposures ranked by dollar value, each with a page reference and a position you can take into the last conversation before signature.
When it runs
Five to ten working days for the largest exposures, two to three weeks for a full reading. Both run alongside legal and lender work rather than after it.
Written for you
Three pieces from the same desk
Short notes on the mechanisms behind the questions above, written from the owner side of the contract.
How an overrun moves through the equity waterfall
The questions your lender will ask
What signing under time pressure costs later
The questions your lender will ask
What signing under time pressure costs later
The other three
One position, four different rooms
The register is written the same way every time. What changes is who the memo has to survive being read by. The overview page sets out all four side by side.