The GMP amendment: what to read before you sign it
The GMP amendment arrives as a package. There is a cover document with the guaranteed maximum price and the date of substantial completion, and behind it a set of exhibits: the estimate, the drawing list, the qualifications and clarifications, the allowance schedule, the staffing plan. The cover page takes a minute to read. The exhibits take an afternoon.
The afternoon is the one that matters. Every number the owner will track for the life of the project is set in those exhibits, and once the amendment is signed they become the baseline that nothing else can be measured against.
Start with the drawing list and the date
The amendment should list the exact drawings and specifications the GMP is based on, with revision dates. That list defines what is in the price. Anything issued after those dates, or not on the list, is outside the GMP and will arrive as a change order. An owner who signs against a drawing list that is three revisions behind the current set has signed for a different building than the one being designed.
Under most AIA A133 based agreements the amendment is an exhibit to the agreement and the drawing list is an exhibit to the amendment. Ask the architect to confirm the list matches the set they consider current.
Then the qualifications and clarifications
This is the list of things the contractor has assumed or excluded. It may say the price assumes normal working hours, no rock, no contaminated soil, that the owner provides a certain utility, or that a certain finish is carried at a specific grade. Each line is a potential change order. Each line is also negotiable before signing and fixed after.
Read every line and sort them into three groups: items you accept, items you want priced into the GMP instead, and items that are so open ended they should be converted to an allowance with a stated amount. A qualification that says the price excludes anything not shown is not a qualification. It is a blank check.
The estimate, line by line
The estimate is the skeleton of the schedule of values you will see on every G703 for the next two years. For each line, ask which of three things it is. A priced line has a subcontractor quote or a signed subcontract behind it. An allowance is a stated amount for undefined scope. An assumption is the construction manager's own estimate for scope it has not bought. The amendment rarely labels them this way, which is why the owner should.
Consider a fictional $27 million parking structure. The estimate shows 38 lines. At signing, 21 are priced by subcontractor quotes, 3 are allowances, and 14 are assumptions. That means roughly a third of the lines, and perhaps 40 percent of the dollars, are the construction manager's judgment. That is normal. It is also the owner's first view of where buyout risk sits.
Contingency and fee on the same page
Find the contractor contingency and confirm its amount and its stated purpose. Find the fee and confirm whether it is fixed or a percentage, and what it is a percentage of. Find the general conditions and confirm whether they are lump sum, monthly, or capped reimbursable. These three items will be referenced on every change order and at closeout.
The allowance schedule and the savings clause
Each allowance should state what scope it covers, the amount, whether that amount includes markup, and ideally a date by which the owner must make the decision that lets the contractor buy it. Missing any of those four is a reason to send the amendment back.
The shared savings clause may be in the base agreement rather than the amendment, but read it now. Know the split, any cap, and what is carved out of savings before you sign the number that savings will be measured against.
After signing: freeze it
Once the amendment is executed, the numbers in it should never be edited. Changes come through change orders, and each change order creates a new version of the contract sum. The amendment remains version one. If the owner's record of version one is a spreadsheet someone later overwrote, there is no baseline. Costwitness stores the amendment as a frozen baseline and carries every later change as a versioned adjustment, so the day one numbers are always there to compare against.
What to do before the signature
- Have the architect confirm the drawing list in the amendment matches the current set.
- Sort every qualification into accept, price it, or convert to an allowance, and send the list back.
- Label every estimate line as priced, allowance or assumption and keep that labeled copy.
- Confirm fee basis, general conditions basis and contingency amount in writing.
Questions on this
Can the owner negotiate the GMP amendment?
Yes, and this is the last point at which negotiation is cheap. Qualifications can be removed, allowances can be resized, and contingency can be discussed. After signing, every one of those becomes a change order conversation instead.
What if the drawings are not finished when the amendment is offered?
That is common and not wrong. The GMP will carry more assumptions and a larger contingency to cover the gap. The owner should know how complete the documents are and expect the qualifications list to be longer. Setting the GMP too early is a separate decision worth its own discussion.
Who should review the amendment on the owner's side?
The architect for the drawing list and scope, the owner's representative or project manager for the estimate and allowances, and counsel for the contractual terms. The owner should then keep the reviewed copy as the baseline record.
In the product
GMP baseline, Allowance register, Shared savings. Free tool: Pre-GMP Readiness Score, Allowance Confidence Band.
Keep reading
Earlier: Priced, allowance or assumption: why every GMP line needs a basis flag. Later: What sits inside a guaranteed maximum price: cost of work, fee, contingency, allowances. All articles on gmp contracts.
See the baseline on a contract like yours.
Thirty minutes on a call. We read a fictional GMP amendment into the baseline and show what the basis flags reveal.