Guaranteed maximum price

A guaranteed maximum price (also known as GMP, not-to-exceed price, NTE, or NTX) contract is a cost-type contract (also known as an open-book contract) such that the contractor is compensated for actual costs incurred plus a fixed fee, which is limited to a maximum price. The contractor is responsible for cost overruns greater than the guaranteed maximum price unless the GMP has been increased by a formal change order (only as a result of additional scope from the client, not from price overruns, errors, or omissions). Savings resulting from unexpectedly low costs are returned to the client.

This is different from a fixed-price contract, also known as stipulated price contract Pawson, O., [https://www.canadianconsultingengineer.com/features/stipulated-price-contract/ "Stipulated Price Contract"], Canadian Consulting Engineer, accessed 14 December 2019 or lump-sum contract whereby cost savings are typically retained by the contractor and essentially become additional profits.{{cite book|last=Cushman|first=Robert Frank|title=Construction Law Handbook, Vol. 1|year=1999|publisher=Aspen Law and Business|isbn=0-7355-0392-3|page=357}}