Contracts without a fixed price, part 1
Cost Plus, with or without GMP, also known as Open Book
Cost Plus with No Gross Max Price (GMP)
Cost Plus with No Gross Max Price (GMP), commonly called "Cost Plus," is a contract method with no fixed price. Essentially, the builder is saying: "I'll build your house, give you every option you want, and you (the owner) agree to pay for the material and labor cost PLUS a fee. The fee embodies the contractor's profit and overhead. The contract should specify which project costs will be charged and what will not. For instance, if your house is wood-framed, you would expect to pay for the labor and framing material to build the walls. These are direct costs and are easy to understand. But you may not expect to see and pay for indirect costs such as the builder's supervision to manage the framer and coordinate with other trades.