A cost-plus-fee contract has a target cost of $5,200,000 with a guaranteed maximum price (GMP) of $5,850,000. The actual costs are $5,950,000. Assuming a standard GMP clause, what amount is the owner responsible to pay for construction costs?
Correct Answer
C) $5,850,000
Under a GMP contract, the owner's liability is capped at the guaranteed maximum price, even if actual costs exceed that amount.
Why This Is the Correct Answer
Under a GMP contract, the owner's liability is capped at the guaranteed maximum price, even if actual costs exceed that amount.
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