In Guaranteed Maximum Contracts construction expert witness Paul Gogulski explains the the G-Max contract:
How do they work? In the following example, the best bid price received from a qualified general contractor for a major renovation is $2.5 million. The owner’s budget is $2.2 million, but modifications and changes are anticipated for an additional $500,000 estimated construction costs. Time is of the essence. The project must start immediately. The owner wishes to cut $300,000 from the base contract without changing the scope of work and at the same time control cost of the additions without giving away the $500,000. The contractor already dropped his price on the first round of negotiations and won’t budge off his $2.5 million. This project is an ideal candidate for G-Max conversion.