GMP
See Guaranteed Maximum Price.
Frequently Asked Questions about Guaranteed Maximum Price (GMP)
What does GMP stand for in real estate development?
GMP stands for Guaranteed Maximum Price, a type of construction contract where the contractor guarantees that the project will not exceed a specified maximum cost.
Where can I learn more about GMP?
See the glossary entry for “Guaranteed Maximum Price (GMP)” for a full definition and explanation of how GMP is used in construction and development contracts.
Why do developers use GMP contracts?
Developers use GMP contracts to limit cost overruns by capping the total amount they are obligated to pay the contractor, transferring more risk to the contractor.
How does GMP relate to project budgeting and forecasting?
GMP provides a ceiling on construction costs, which can improve the accuracy of project budgeting and financial forecasts, making it easier to attract financing or investment.
Is GMP discussed in any other A.CRE content?
Yes. The topic is also referenced in the episode “The Sixth Sense of Real Estate: An Intro to Super Forecasting | S4E5,” which explores forecasting techniques in development and investment decisions.
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