Shared Savings Clause
A contract provision splitting the difference between a project's [[concept-guaranteed-maximum-price|guaranteed maximum price]] and its actual final cost, when the project comes in under the GMP, between the owner and the contractor, giving the contractor a real financial incentive to control costs rather than just protecting its own fee.
Why it matters
Without this clause, a contractor that saves the owner real money on a GMP project gets nothing extra for it, the owner keeps the entire savings, which removes much of the financial incentive a GMP contract is supposed to create in the first place.
On a real project
A CM at Risk contract includes a fifty-fifty shared savings clause, so when the finished project comes in under its GMP, the contractor and owner split the difference evenly instead of the owner keeping it all.
Who this matters most to
A Preconstruction Manager negotiates the shared savings clause's split ratio during contract formation, while a Cost Engineer tracks the actual savings the clause ends up applying to.
Where this goes wrong
A contractor delivers real cost savings on a GMP project, but the contract's shared savings clause was never actually negotiated or included. The owner keeps the entire savings, and the contractor has no contractual claim to any share of the value it created.