CMAA Construction Management Practice Exam

Guaranteed Maximum Price (GMP) is a pricing approach that creates a ceiling for construction costs and is most effective when the contractor is involved early and takes on cost risk within the project delivery framework. This pairing naturally occurs with CM at Risk and Design-Build. In CM at Risk, the construction manager commits to delivering the project within a GMP, absorbing cost risk to keep expenditures under the ceiling as the design develops. In Design-Build, a single team handles both design and construction, which facilitates early cost control and allows a GMP to be set once enough design detail exists to fix price. Other pairings don’t align as closely with the GMP concept. Time and Materials or Unit Price describe pricing methods rather than delivery methods, while Traditional or Multiple Prime describe different structural approaches that don’t center on a guaranteed price tied to contractor risk in the same way.