In Guaranteed Maximum Contracts construction expert witness Paul Gogulski explains the the G-Max contract:
Guaranteed Maximum Contracts or G-Max are becoming more popular as a corporate vehicle to control cost and integrate the diverse interests of a complex project. Not to be confused with cost plus, the G-Max contract is bid exactly the same as lump sum. The contractor assumes the same risk, with a big stipulation: he’s willing to share in the savings on the basis of the owner’s guarantee of fee and prompt payment of net cost.
There’s no difference in cost or risk between Lump Sum and Guaranteed Max, but a big difference in results, particularly on the owner’s side of the fence. Don’t let anyone tell you that G-Max cost more. They don’t! In fact, Lump Sum contracts are sometimes converted to G-Max for the same price or less.
More to come from Gogulski & Associates Inc.