Article Date: 02/15/2013


Expert Offers Advice on How to Make GMP Contracts ‘Work for You’


By Steve Rizer

 

Early, continuous contractor input is one of the keys to a successful guaranteed maximum price (GMP) arrangement, Trauner Consulting Services Inc. Director Richard Burnham told a group of professionals attending a webinar that WPL Publishing held earlier this month. “If we want to succeed in a GMP, we want the general contractor involved early, and we want him involved throughout the design-development process.”

 

“We want the owner to participate in the trade contractor bid reviews,” Burnham told a target audience of owners, contractors, engineers, and their attorneys during WPL's “Making GMP Contracts Work for You” webinar. “We want the designer to participate in that so that all of the parties understand how the marketplace is pricing the project as it is being articulated in those documents.”

 

Burnham stressed that “open communication” is imperative for a successful GMP endeavor. “All of this is possible, in my opinion, only if the parties staff the project with people who are capable of open and honest communication with one another from the outset.”

 

Burnham also emphasized that it is important to “spend the time with the contracts early on. As you’re agreeing on a GMP, make sure that you can understand [‘contingency,’ ‘self-performed work,’ and ‘over-runs’ and ‘under-runs’] because they show up time and time again as problems. How is the contingency going to be handled? How are we going to administer self-performed work by the general conditions? And, how do we handle over-runs and under-runs in the buy-out?”

 

During the 90-minute program, Burnham also discussed the components of a GMP, chronology of performance, adjustments to a GMP, and other areas.


 

A recording of the webinar can be purchased via the following link: http://constructionpronet.com/Products/1034.aspx.

 



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