In a GMP contract, the guaranteed maximum price is best understood as:
Correct Answer
B) A contract ceiling on payable cost and fee, subject to authorized changes
A GMP is a ceiling on the amount payable for the covered work, subject to changes allowed by the contract. Other choices confuse it with fees, bonds, or delay damages.
Why This Is the Correct Answer
A GMP is a ceiling on the amount payable for the covered work, subject to changes allowed by the contract. Other choices confuse it with fees, bonds, or delay damages.
Why the Other Options Are Wrong
Option A: Classify the condition as a minimum fee the owner must pay regardless of cost
Choice A (A minimum fee the owner must pay regardless of cost) is rejected because it names a financial document or payment mechanism, not the GMP action/result stated by A contract ceiling on payable cost and fee, subject to authorized changes.
Option C: Classify the condition as a bid bond amount as a bonding paperwork issue that controls gMP
The trap in C is A bid bond amount. That selection is wrong because it shifts the question into contract administration money flow.
Option D: Classify the condition as a daily liquidated-damages rate
Choice D gives A daily liquidated-damages rate. Its specific error: it leaves out the controlling GMP result: A contract ceiling on payable cost and fee, subject to authorized changes.
Memory Technique
Attach GMP to a redline: remember the function, then the wording A contract ceiling on payable cost and fee, subject to authorized changes.
Reference Hint
Open Construction Project Management, 5th Ed. (2022); use the index entry or section for "Guaranteed maximum price concept" to confirm that A GMP is a ceiling on the amount payable for the covered work, subject to changes allowed by the contract.
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