Which contract type gives the Owner more involvement in subcontractor procurement?

Which contract type gives the Owner more involvement in subcontractor procurement?

• A. Cost Plus/GMP
• B. Lump Sum
• C. Time & Materials
• D. Fixed Price

Answer: (A)

In Cost Plus/GMP contracts, the owner has the most control over procurement decisions. The project is reimbursed for actual costs plus an overhead/fee, with a guaranteed maximum price (GMP) that caps the total. Because costs are being tracked and capped, the owner (often through the designer or CM role) tends to participate more actively in the procurement process—reviewing and approving subcontractor bids, selecting or prequalifying subcontractors, and supervising procurement choices to ensure cost and quality expectations are met. The general contractor acts more as an agent managing costs and schedules rather than unilaterally locking in subs. In contrast, lump-sum or fixed-price arrangements place the risk on the contractor to deliver the project within a set price, which typically means the contractor takes the lead on subcontractor procurement to control cost and schedule. Time and materials can involve variable pricing, but the structure still usually centers procurement decisions with the contractor rather than requiring active owner involvement in every subcontractor choice.

In Cost Plus/GMP contracts, the owner has the most control over procurement decisions. The project is reimbursed for actual costs plus an overhead/fee, with a guaranteed maximum price (GMP) that caps the total. Because costs are being tracked and capped, the owner (often through the designer or CM role) tends to participate more actively in the procurement process—reviewing and approving subcontractor bids, selecting or prequalifying subcontractors, and supervising procurement choices to ensure cost and quality expectations are met. The general contractor acts more as an agent managing costs and schedules rather than unilaterally locking in subs.

In contrast, lump-sum or fixed-price arrangements place the risk on the contractor to deliver the project within a set price, which typically means the contractor takes the lead on subcontractor procurement to control cost and schedule. Time and materials can involve variable pricing, but the structure still usually centers procurement decisions with the contractor rather than requiring active owner involvement in every subcontractor choice.