Certified Healthcare Constructor (CHC) Practice Exam

Which of the following is a reason to use a cost plus GMP contract?

1. Fixed expenses and low risk

2. Project complexity requiring flexibility

3. Simple projects with low costs

4. Expanded design after initial planning

The correct answer is: Project complexity requiring flexibility

Using a cost plus Guaranteed Maximum Price (GMP) contract is particularly advantageous in situations of project complexity requiring flexibility. This type of contract allows for adjustments as the project develops, which is critical when unforeseen challenges arise or when client requirements evolve over time. In complex scenarios, strict adherence to a predetermined budget may not be feasible due to the unpredictable nature of the project. A cost plus GMP contract provides reassurance that, while costs can vary, there is a ceiling on the total price. This arrangement motivates contractors to manage costs effectively while still accommodating necessary changes and additions to the project scope, ultimately leading to a more collaborative relationship between the contractor and the client. This flexibility is essential for handling the dynamic needs that often come with complex construction projects in the healthcare sector, where compliance with standards and regulations can also add layers of ambiguity. In contrast, fixed expenses and low-risk projects would not typically require such flexibility, nor would simple projects with lower costs be best suited for this contract type. Additionally, while expanded design after initial planning may suggest a need for flexibility, it may not always necessitate the specific structure of a cost plus GMP approach, especially if the project remains straightforward.