What does the term 'GMP' stand for in construction contracts?

The term 'GMP' in construction contracts stands for Guaranteed Maximum Price. This concept plays a significant role in managing the financial aspects of construction projects. A Guaranteed Maximum Price contract establishes a cap on the amount that the project owner will have to pay, ensuring that the costs do not exceed the specified maximum.

By having a GMP in place, project owners can have greater confidence in budgeting and financial planning, knowing that the contractor is incentivized to keep costs down to maximize their profit margin below the cap. Additionally, this arrangement often leads to more collaborative relationships between the owner and the contractor, as both parties work towards minimizing costs while maintaining quality and timeliness.

The other terms listed do not relate directly to established concepts in construction contracting. General Management Plan, Gross Minimum Pricing, and General Monetary Proposal do not align with industry practices or terminology recognized as key principles in construction finance management. Thus, Guaranteed Maximum Price is the clear and accurate definition of GMP in this context.