Contract Sum and GMP Clause Samples

The 'Contract Sum and GMP' clause defines the total financial amount the contractor will be paid for completing the project, and establishes a Guaranteed Maximum Price (GMP) that caps the owner's financial liability. In practice, this clause specifies the agreed-upon contract sum and states that any costs exceeding the GMP are typically the contractor's responsibility, unless changes are formally approved. Its core function is to provide cost certainty for the owner while incentivizing the contractor to control expenses, thereby minimizing the risk of budget overruns.