In a guaranteed maximum price contract, what is contractor contingency typically used for?
Correct Answer
D) Covered costs within the agreed GMP risk allocation, not owner-added scope.
GMP contingency is governed by the contract and is not a blank check for owner changes.
Why This Is the Correct Answer
GMP contingency is governed by the contract and is not a blank check for owner changes.
Why the Other Options Are Wrong
Option A: Base the gMP contingency response on unlimited owner scope growth
Choice A gives Unlimited owner scope growth. Its specific error: it answers the GMP contingency prompt with the wrong practical move.
Option B: Select bid bond replacement for gMP contingency although the file does not verify gMP contingency
Choice B (Bid bond replacement.) is rejected because it treats GMP contingency as optional.
Option C: All design errors regardless of contract
In procurement and contracting, All design errors regardless of contract. is the wrong selection for GMP contingency: the choice would not get the project to Covered costs within the agreed GMP risk allocation, not owner-added scope.
Memory Technique
Use GMP contingency as the label and Covered costs within the agreed GMP risk allocation, not owner-added scope. as the definition to recall under pressure.
Reference Hint
Open NASCLA Contractors Guide to Business, Law and Project Management, 14th Ed.; use the index entry or section for "Guaranteed maximum price" to confirm that GMP contingency is governed by the contract and is not a blank check for owner changes.
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