
There are other forms of construction management contracts that provide more financial
security to the Owner. One example is a contract that has a guaranteed maximum
price (“GMP”) clause. A GMP construction management contract assumes
that there’s a general understanding of the Owner’s goals and objectives. In this
approach a financial incentive may be included that promotes various value added
initiatives by the construction manager that ultimately saves the Owner money. In
this scenario the construction manager would receive a bonus, based on a percentage
of the net savings.
Construction management contracts have the potential of reducing the overall project
schedule by approximately 20% and therefore saving the Owner financially – reducing
the cost of construction financing.
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