GMP Closeout: How to Prepare the Reconciliation Before the Owner's Auditor Does

The building is done and everyone is pleased with it. Then the owner's auditor sends a request list. Labor burden rates for every craft. The general conditions staffing by month. Every contingency draw, with the reason. Subcontract change orders against the original buyout.

Three weeks later the questions come back. A superintendent charged to the job for two months after he moved to another project. Small tools billed as cost when the agreement put them in the fee. A contingency draw for a scope gap the agreement says the contractor carries.

None of it is dishonest. All of it comes off the final number.

On a hard-bid job, closeout is a fight about changes, notices and retainage. On a negotiated job it is a reconciliation, and the agreement wrote the rules for it before the job started. The team that reads those rules first, and checks its own record against them, decides how the conversation goes.

The GMP reconciliation workflow: the agreement and your cost records feed one reconciliation register, each gap is fixed, defended or conceded before the owner's audit, and retainage, disputed costs, the savings split and open changes stay separate, never one number.

Step 1: Pull the clauses that decide the final number

On a cost-plus agreement with a GMP, the final number is set by a handful of clauses. In AIA's cost-plus forms (A102 between owner and contractor, A133 for construction manager at risk) they sit in the articles on the contract sum, the GMP, costs to be reimbursed, costs not to be reimbursed, accounting records, and payments. Owner-written agreements move them around, but the topics are the same.

Find and read:

• The GMP and how it adjusts. What changes the GMP, and what does not?
• Costs to be reimbursed. Labor, staff, materials, equipment, subcontracts, general conditions. Read the limits as well as the list: which staff, at which locations, at which rates.
• Costs not to be reimbursed. Usually overhead, home-office staff outside the agreed roles, and costs caused by the contractor's own failure. This list matters more than the first one.
• The fee. Fixed or a percentage? What is inside it, and does it move with changes?
• Contingency and allowances. Whose contingency is it, what can it be used for, and who approves each draw?
• Savings. All to the owner, shared at a split, or treated differently by category?
• Accounting records and audit. What the owner can inspect, for how long after final payment, and at whose cost. The questions to ask of that clause are in technical audit rights at closeout.
• Retainage and final payment. When retainage is released, and what has to be finished first.

Then read the GMP amendment and every change to the agreement. The exhibit that set the GMP often carries the staffing plan, the rate schedule and the assumptions the auditor will test against.

Step 2: Build the reconciliation register

Put each clause in one register, cited to its page, with the record that proves your position.

Item	Clause and page	What the agreement allows	Your record	Gap
Staff costs	Costs to be reimbursed	Named roles, at the project, at agreed rates	Payroll by person and month	Staff charged after leaving the job
General conditions	GMP amendment	Lump sum or cost, per the exhibit	GC cost report	Items billed as cost that sit in the fee
Contingency	Contingency clause	Uses and approval route	Draw log with approvals	Draws without approval or for excluded scope
Allowances	Allowance clause	Reconcile to actual, adjust GMP	Allowance ledger	Overruns not carried as changes
Subcontracts	Costs to be reimbursed	Buyout value plus approved changes	Sub ledgers, change orders	Sub changes not passed through
Savings	Savings clause	Split as stated	Final cost against GMP	Split not calculated the agreement's way
Records	Accounting records	What the owner can inspect	Document index	Records missing for the audit period
Retainage	Payment clause	Release conditions	Pay applications	Conditions still open

The register does two jobs. It tells you what to fix before the audit, and it shows the auditor you have read the same clauses they have.

Step 3: Test the costs the way the auditor will

Auditors work from the costs-not-reimbursed list and the rate schedules. Do the same, first.

1. Staff time. Match every person charged to the project against the staffing plan and the dates they were actually on the job.
2. Rates. Check labor burden, equipment and staff rates against the agreed schedule, not against what the accounting system defaults to.
3. Categories. Look for costs charged as cost of the work that the agreement places in the fee or in general conditions, and for anything charged twice.
4. Subcontracts. Tie each subcontract's final value to its buyout and its approved changes. Unapproved sub changes are the most common surprise.
5. Self-performed work. Make sure it is priced the way the agreement says, with the backup the auditor will ask for.

Fix what is wrong before you submit. A cost you withdraw yourself costs you the amount. A cost the auditor finds costs you the amount and some of the trust negotiated work runs on.

Step 4: Trace the contingency and the allowances

Contingency is where most GMP disputes start, because everyone remembers its purpose differently.

For each draw, record what it paid for, which clause allowed it, and who approved it and when. Then separate the draws into three groups: clearly allowed, allowed but missing an approval, and outside what the agreement permits. The second group can usually be fixed with paperwork. The third group needs a decision before the auditor makes it for you.

Do the same for allowances. Each one should end with a reconciled actual cost and, where it ran over or under, the GMP adjustment the agreement requires.

Step 5: Keep the money in separate piles

At the end of a GMP job, several kinds of money are in play, and they follow different rules. Keep them apart in the reconciliation and in every conversation about it:

• Retainage held against completion, released on the agreement's conditions. The documents usually owed first are in the construction closeout checklist.
• Disputed costs the owner's auditor has questioned.
• Savings under the GMP, split however the agreement says.
• Open changes that move the GMP itself.

Adding them into one number makes every one of them harder to settle.

Step 6: Start before substantial completion

The best time to reconcile is while the project team is still on the job, the subcontract closeouts are open, and the people who approved each contingency draw can still explain it. Six months after completion, the auditor has the agreement and you have a folder.

Where Halozen sits

Halozen reads the agreement, the GMP amendment and the cost record you upload, and builds the reconciliation register: every clause that decides the final number, your record against it, and the gap, each line cited to the page. Your team decides what to fix, what to defend and what to concede.