This form is a Construction Contract that may be executed with either a cost plus or fixed fee payment arrangement. The form contains the following additional subject matters and complies with the laws of the State of Florida: scope of work, work site, warranty and insurance.
Cost plus construction with guaranteed maximum is a project delivery method commonly used in the construction industry. It combines the benefits of the cost plus contract and the guaranteed maximum price to provide greater transparency, control, and risk management for both the owner and the contractor. This approach ensures that the project is completed within an agreed-upon budget while still allowing for flexibility and necessary adjustments during the construction process. With cost plus construction with guaranteed maximum, the contractor is reimbursed for the actual costs incurred during construction, including labor, materials, equipment rental, and subcontractor fees. Additionally, the contractor receives an agreed-upon fee or percentage of the total costs as profit. This cost plus arrangement allows for an open book approach, where the owner has access to all project costs and invoices, promoting transparency and trust between the parties involved. The guaranteed maximum price (GMP) component of this project delivery method places a cap on the total cost that the owner will pay. This helps to provide a sense of security to the owner by ensuring that the project will not exceed a certain budget. The GMP is typically established through thorough cost estimating and value engineering exercises conducted by the contractor and other project stakeholders. Different types of cost plus construction with guaranteed maximum include: 1. Guaranteed Maximum Price with Shared Savings: In this type of contract, if the contractor completes the project under the guaranteed maximum price, they may share the cost savings with the owner. This incentivizes the contractor to manage the project efficiently and identify cost-saving opportunities. 2. Guaranteed Maximum Price with Savings Reversion: This variation allows the contractor to keep the entire cost savings achieved if the project is completed under the guaranteed maximum price. The contractor is motivated to enhance their cost control measures and find innovative ways to reduce expenses. 3. Guaranteed Maximum Price with Not-to-Exceed Cap: This type of contract establishes a maximum price that the contractor cannot exceed. If the actual costs end up being lower, the owner benefits from the savings. However, if the actual costs go beyond the guaranteed maximum price, the contractor bears the additional expenses, providing a stronger incentive for careful budget management. Benefits of cost plus construction with guaranteed maximum include accurate cost tracking, shared financial risk, increased collaboration between owner and contractor, and the flexibility to make necessary project adjustments without affecting the budget significantly. It promotes a cooperative working environment, as both parties strive to achieve a successful project outcome within agreed-upon financial boundaries.
