Which contract type gives the Owner the ability to be more involved in subcontractor procurement?

Which contract type gives the Owner the ability to be more involved in subcontractor procurement?

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

Answer: (C)

In this context, the contract type that gives the Owner the most opportunity to influence subcontractor procurement is Cost Plus with a Guaranteed Maximum Price (GMP). Because costs are reimbursed plus a fee, and there’s a ceiling price established, the owner (often with the design team) has a clear incentive to participate in the subcontractor bidding and selection process to protect value and ensure alignment with the GMP and project goals. The owner can review bids, prequalify subcontractors, and approve selections to keep costs under the cap, with cost transparency and open-book accounting aiding oversight. Lump sum or fixed price contracts place most procurement risk on the contractor and typically limit owner control over how subs are selected, since the price is fixed and the contractor is incentivized to optimize procurement to meet that price. Time and materials offers cost visibility but generally centers procurement decisions with the contractor as work progresses, rather than granting the owner sustained procurement control.

In this context, the contract type that gives the Owner the most opportunity to influence subcontractor procurement is Cost Plus with a Guaranteed Maximum Price (GMP). Because costs are reimbursed plus a fee, and there’s a ceiling price established, the owner (often with the design team) has a clear incentive to participate in the subcontractor bidding and selection process to protect value and ensure alignment with the GMP and project goals. The owner can review bids, prequalify subcontractors, and approve selections to keep costs under the cap, with cost transparency and open-book accounting aiding oversight.

Lump sum or fixed price contracts place most procurement risk on the contractor and typically limit owner control over how subs are selected, since the price is fixed and the contractor is incentivized to optimize procurement to meet that price. Time and materials offers cost visibility but generally centers procurement decisions with the contractor as work progresses, rather than granting the owner sustained procurement control.