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The architect has completed 60% of the construction documents. The owner wants to establish the guaranteed maximum price (GMP) at this point before 100% of the construction documents are complete. Several flooring finish items are still undetermined.
What should be included in the project manual to make sure the contractor has a cost to cover all finishes?
When a GMP (Guaranteed Maximum Price) is established before the design is 100% complete and specific materials are not yet chosen, the correct approach is to specify allowances in the project manual.
An allowance is a fixed monetary amount for a specific scope item (e.g., flooring finishes) that allows the contractor to carry a cost in the bid/GMP until the actual product is selected. This ensures the GMP covers the item without delaying pricing.
A . Contingency --- Is for unforeseen conditions, not specific unselected finishes.
B . Schedule of unit prices --- Typically used for variable-quantity work, not for unknown product selection.
D . Alternate --- Provides an option for substitution, but does not guarantee a base cost in the GMP.
PDD Reference: ARE 5.0 PDD ''Project Manual and Specifications---Allowances, Alternates, and Unit Prices,'' AIA A201 3.8, CSI Division 01---General Requirements.