In CPFF contracts, reimbursable costs are limited to what counts as allowable costs. The key idea is that only costs that are reasonable, allocable to the contract, and in accordance with the contract terms and applicable cost principles can be billed to the government. Costs that are unallowable—such as personal expenses or items not properly allocable to the project—cannot be reimbursed, even if they were incurred. The fixed fee is separate from these reimbursable costs, which hinges entirely on whether the costs meet the allowable criteria.

Risk management is about identifying potential threats and opportunities so the project can proceed with informed, proactive planning rather than avoiding work. The idea is to enable better decision-making, control exposure, and improve outcomes by addressing risks before they become problems. Choosing to avoid doing the job at the site is not a typical benefit because risk management aims to keep the project moving with appropriate responses, not to abandon the work. In contrast, systematically identifying and managing risk is a core benefit, since it provides a structured approach to understanding what could go wrong and how to respond. It also helps uncover opportunities that can enhance project delivery, such as scheduling efficiencies or cost-saving measures, and it reduces or avoids large losses by anticipating and mitigating major threats.

GMP is about setting a maximum price for a project based on a defined scope, with changes to the price allowed only through formal change orders that adjust the scope or specifications. The statement that assigns cost overruns to the contractor unless there is a client-initiated change order describes risk allocation, not what GMP is. It’s focusing on who pays if costs run over, rather than on the pricing mechanism itself—the capped price and how changes to scope affect that price. Think of it this way: under a GMP arrangement, the price ceiling protects the owner from unlimited costs, while the contractor is responsible for delivering within that ceiling for the defined scope. When the owner (or architect/designer acting on the owner’s behalf) approves a change that expands the scope, the GMP is adjusted accordingly through a change order. That adjustment is how scope changes are handled, not part of what defines GMP. The other statements align more directly with what GMP represents. GMP is described as a common pricing structure used in construction, which captures the idea of a price ceiling tied to a defined scope. It’s also common to describe GMP as a cost arrangement where actual costs incurred up to the maximum price are recovered plus a fee that covers the contractor’s risk, i.e., a cost-plus-with-a-GMP structure. So the statement about overruns and who pays, while related to GMP in practice, does not define GMP itself, making it the best choice for not being a definition.

Guaranteed Maximum Price (GMP) is a pricing approach that creates a ceiling for construction costs and is most effective when the contractor is involved early and takes on cost risk within the project delivery framework. This pairing naturally occurs with CM at Risk and Design-Build. In CM at Risk, the construction manager commits to delivering the project within a GMP, absorbing cost risk to keep expenditures under the ceiling as the design develops. In Design-Build, a single team handles both design and construction, which facilitates early cost control and allows a GMP to be set once enough design detail exists to fix price. Other pairings don’t align as closely with the GMP concept. Time and Materials or Unit Price describe pricing methods rather than delivery methods, while Traditional or Multiple Prime describe different structural approaches that don’t center on a guaranteed price tied to contractor risk in the same way.

Design phase documents are the records produced as the design team develops and coordinates the project, focusing on the design itself and how it affects cost and schedule. They include documentation of design milestones, progress reporting tied to design activities, and records of design changes along with their cost implications. A project cost summary may be produced to reflect the expected total cost based on the evolving design. What doesn’t belong in this set is the selection of the construction manager. The CM is chosen during preconstruction or procurement steps, not as a document generated during the design phase. The CM selection is a delivery-method decision that typically occurs before or alongside the design effort, and while the chosen CM may later influence design work, the act of selecting them is not a design-phase document.