A GMP contract splits savings 60 percent to the owner and 40 percent to the contractor. Final cost is $120,000 below the GMP. What contractor savings share is earned?
Correct Answer
C) $48,000
The contractor share is $120,000 x 40% = $48,000. Other choices use a 50/50 split, the owner share, or the full savings.
Why This Is the Correct Answer
The contractor share is $120,000 x 40% = $48,000. Other choices use a 50/50 split, the owner share, or the full savings.
Why the Other Options Are Wrong
Option A: $60,000
shared savings, choice b: $60,000 backs into 37,500 when divided by 1.6; the accepted setup gives 30,000 on that same base.
Option B: $72,000
shared savings, choice c: 60 percent x $120,000 gives $72,000. That calculation follows multiplies those two listed numbers.
Option D: $120,000
shared savings, choice d: the number $120,000 comes from $120,000 but stops before the calculation reaches $48,000.
Memory Technique
Keep a badge beside shared savings: if one number is skipped, the option drifts away from $48,000.
Reference Hint
Open Construction Project Management, 5th Ed. (2022); use the index entry or section for "GMP savings sharing" to confirm that The contractor share is $120,000 x 40% = $48,000.
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