In Guaranteed Maximum Contracts construction expert witness Paul Gogulski explains the the G-Max contract:
There is another reason for using the G-Max contract system: It is the best vehicle for recovering cost when pricing on extras becomes unreasonable. The fact that owners have tremendous leverage on extras is not often mentioned among users, perhaps because it is a business advantage. Consider once again the outrageous cost for a new door. Assume that the contractor wants $1,500 to cut the hole and install a new door, plus another $50,000 to relocate the 4-inch gas pipe that nobody knew existed. Assume also that the true cost of the piping relocation is only $10,000, but the contractor will not back off his estimate. The work must start and he demands approval.
Under lump sum contracts owner’s haven’t got much choice, but under the G Max system, even if you agree to the $50,000, all you’ve given away is the difference in fees, or $2,400 instead of $40,000. Once the work is complete and true cost is known, even this can be adjusted. There’s a strong incentive here to be honest. Nothing like it exists with any other format. Cost plus contracts claim to be the same, but in reality they do not have any incentive for shared savings or efficiencies.