GMP vs Cost Plus Contract
A GMP caps reimbursable cost subject to contract terms; a cost plus contract reimburses allowable cost plus fee and may or may not include a maximum price.
Cost Plus Contract
- Uncertain scope
- Early starts
- Transparent reimbursement
Key differences
| Point | GMP | Cost Plus Contract |
|---|---|---|
| Price ceiling | Includes a maximum price. | May not include a maximum price unless separately negotiated. |
| Risk allocation | Contractor often carries more overrun risk above the GMP. | Owner often carries more cost risk. |
| Common backup | Estimate, assumptions, allowances, contingencies, and exclusions. | Actual cost records, fee terms, markups, and audits. |
Example in context
A CMAR team develops a GMP after design development. If scope starts earlier, some work may be performed cost plus until the GMP is finalized.