Blog
Reading for owners on a GMP contract.
Ninety articles on the inside of the guaranteed maximum price: the two contingency funds, the cause on every change, buyout and shared savings, and the report the board and the lender read. Written for the party that signs, not the party that builds.
GMP contracts
How a guaranteed maximum price contract works from the owner's side, and where the money moves inside it.
GMP contractsWhat a GMP contract is, read from the owner's sideThe GMP is a ceiling, not a price. This post explains what moves underneath it and what an owner should keep a record of from the first pay application.Aug 20, 2026 · 4 minGMP contractsCM at risk versus design bid build: what changes for the ownerUnder design bid build the owner buys a price. Under CM at risk the owner buys a process with a cap on it. Here is what that shift means for oversight.Aug 17, 2026 · 4 minGMP contractsWhat sits inside a guaranteed maximum price: cost of work, fee, contingency, allowancesFive parts make up a guaranteed maximum price, and they do not behave the same way. A walk through each one with a fictional project for scale.Aug 14, 2026 · 4 minGMP contractsThe GMP amendment: what to read before you sign itThe amendment is where the ceiling becomes a contract. A reading order for the exhibits that will govern contingency, allowances, buyout and savings.Aug 11, 2026 · 4 minGMP contractsPriced, allowance or assumption: why every GMP line needs a basis flagThree words, one per line, turn a flat estimate into a map of where the GMP is firm and where it is soft. How to assign them and what they reveal.Aug 8, 2026 · 4 minGMP contractsQualifications and clarifications: the list of things the contractor has not agreed toEvery GMP comes with a list of exclusions and assumptions. This post explains how to read that list, sort it, and keep it where it can be found later.Aug 5, 2026 · 4 min
Contingency
Contractor contingency and owner contingency: who draws, who approves, and when the fund runs out.
ContingencyContractor contingency versus owner contingency: two funds, two purposesTwo funds sit near each other in a GMP budget and get confused constantly. Here is what each one is for and who should be drawing on it.Jul 6, 2026 · 4 minContingencyWho approves a contingency draw, and who shouldThe contract names who can approve a contingency draw. The owner's job is to know that rule before the first draw appears on a pay application.Jul 3, 2026 · 4 minContingencyContingency burn rate: how to read it against percent completeA contingency balance by itself says nothing. Read it against how far along the work is, and the same number tells a different story.Jun 30, 2026 · 4 minContingencyThe exhaustion date: why a date beats a percentage in a board meetingTell a board the contingency is 38 percent spent and they nod. Tell them it runs out in March and the building finishes in August, and they act.Jun 27, 2026 · 4 minContingencyWhat happens when the contractor's contingency runs outAn exhausted contractor contingency does not end the risk. It changes where the next cost lands, and the owner should be watching all three places.Jun 24, 2026 · 4 minContingencyContingency draws without backup: flag them, do not block themA draw arrives with a one line description and no invoice. The owner's instinct is to refuse it. The better move is to record the gap and keep the work moving.Jun 21, 2026 · 4 min
Change orders
Cause classification, notice deadlines, and the difference between owner scope and a design gap.
Change ordersCause classification: owner scope, design gap, unforeseen, coordinationFour causes cover almost every change on a GMP project. Each one points at a different fund, which is why the owner should name the cause early.May 22, 2026 · 4 minChange ordersOwner scope change or design gap: the same duct conflict, two different billsOne duct, one beam, one PCO. Whether it lands on the owner or the architect depends on a question most owners never ask out loud.May 19, 2026 · 4 minChange ordersUnclassified change orders and the thirty day ruleGive every change order thirty days to get a cause. After that, the facts are gone and the default answer is usually the owner.May 16, 2026 · 4 minChange ordersNotice deadlines: the clock that nobody on the owner's side is watchingThe contract gives the contractor a set number of days to give notice of a change. If nobody on the owner's side counts those days, the clause does nothing.May 13, 2026 · 4 minChange ordersFrom PCO to executed change order: the lifecycle owners should trackA PCO is not a change order, and an approved change order is not yet a cost. Tracking the states in between is how an owner sees real exposure.May 10, 2026 · 4 minChange ordersUnforeseen conditions: what the contract says about who paysRock, water, buried tanks, old foundations. The contract usually puts these on the owner, but with conditions attached that owners rarely check.May 7, 2026 · 4 min
Buyout and shared savings
What each package carried in the GMP, what it was bought for, and what is left to split at closeout.
Buyout and shared savingsBuyout: what it is and why the owner should track it package by packageBuyout is the process of turning each estimated trade into a signed subcontract. Owners who track it by package know how much of the GMP is real.Apr 7, 2026 · 4 minBuyout and shared savingsBuyout savings: who owns them under a CM at risk contractWhen a package is bought under its GMP value, the saving has an owner. The contract decides who, and it often says so in three separate clauses.Apr 4, 2026 · 4 minBuyout and shared savingsWhen a package is bought above its GMP lineA package bought over its carried value is a buyout overrun. The question for the owner is which fund absorbed it and whether the record shows that.Apr 1, 2026 · 4 minBuyout and shared savingsBuyout coverage at GMP: how much of the price is a subcontract, not an estimateAt GMP signing, part of the price is subcontracts and part is estimates. Buyout coverage measures the split and tells the owner how much can still move.Mar 29, 2026 · 4 minBuyout and shared savingsAn allowance is a promise to find out laterAllowances look like line items but behave like open questions. This post explains what an allowance is inside a GMP and why the owner should treat each one as unfinished business.Mar 26, 2026 · 4 minBuyout and shared savingsAllowance reconciliation: how and when it should happenReconciling an allowance is a small transaction with a contract behind it. Here is the sequence, the documents, and the timing an owner should expect.Mar 23, 2026 · 4 min
Owner reporting
Pay applications, anticipated final cost, and the monthly report the board and the lender read.
Owner reportingHow to read a G702 and G703 pay application as an ownerThe G702 is the summary and the G703 is the evidence. Most owners sign the first without reading the second.Feb 21, 2026 · 4 minOwner reportingAnticipated final cost: the number that matters more than the GMPThe GMP tells you the most you can be asked to pay. Anticipated final cost tells you what you will probably pay. They are rarely the same number.Feb 18, 2026 · 4 minOwner reportingThe anticipated final cost waterfall, step by step from the GMPStart at the GMP. Subtract buyout savings, add change orders, adjust allowances, draw contingency. Each bar is a step the board can question.Feb 15, 2026 · 4 minOwner reportingWhy a trend line needs stored snapshots, not recalculated historyIf last month's figure is recomputed from today's registers, last month's figure no longer exists. The trend the board sees is a fiction.Feb 12, 2026 · 4 minOwner reportingWhat a monthly owner report should contain, in orderPosition first, then what moved, then what is open, then what needs a decision. A report in any other order makes the reader hunt for the point.Feb 9, 2026 · 4 minOwner reportingThe one page report for the board and the lenderNobody on a board reads page six. Put the GMP position, the forecast, the contingency dates and the decisions on one page, and let the rest be an appendix.Feb 6, 2026 · 4 min
By owner type
Developers, owner's representatives, school districts, universities and public agencies on CM at risk.
By owner typeSchool district bond programs on CM at risk: what the board needs to see monthlyA bond program runs for years and the board reads one report a month. What that report should carry on a CM at risk contract, building by building.Jan 7, 2026 · 4 minBy owner typeUniversity capital projects: GMP oversight across several buildings at onceA capital projects office with five GMPs open and three project managers. How to keep each contract's contingency, changes and buyout on one consistent page.Jan 4, 2026 · 4 minBy owner typeDevelopers: how a GMP overrun reaches the equity waterfallA developer's hard cost overrun does not stop at the construction budget. It moves through the loan, the equity and the promote. Where to watch it early.Jan 1, 2026 · 4 minBy owner typeOwner's representatives: one ledger per owner, one portfolio view for youEach client owns their GMP record. The rep needs to see all of them at once without mixing them up. How to structure the books when you serve several owners.Dec 29, 2025 · 4 minBy owner typePublic agencies: transparency requirements and the contingency logPublic records requests, auditors and council members all end up reading the contingency log. What a public agency should put in every entry, and why.Dec 26, 2025 · 4 minBy owner typeHealthcare owners: GMP contracts on phased construction in a working hospitalBuilding inside a working hospital means phases, infection control, and interim life safety measures. Each phase needs its own reading inside the single GMP.Dec 23, 2025 · 4 min
One next step
Read the ledger instead of the summary.
Thirty minutes on a call. We walk the eight modules on a fictional project at your GMP size.