Planning & EstimatingQuestion 618 of 700
A grading and utility project has uncertain quantities of rock excavation that cannot be measured accurately until digging begins. Which contract type is BEST suited?
a.Lump-sum, because the total is fixed regardless of quantities.
b.Cost-plus with no fee cap for the entire project.
c.A single fixed guaranteed maximum with no measured quantities.
d.Unit-price, paying an agreed rate per unit (e.g., per cubic yard) for the actual measured quantities.
Explanation
Correct: a unit-price contract fits work with uncertain but measurable quantities; the owner pays the agreed rate for each unit actually installed or excavated. Lump-sum forces the contractor to guess the quantity and load the bid with risk. Open-ended cost-plus gives no cost control here. A fixed GMP without measuring the variable quantity does not match the uncertainty.
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Related questions on this topic
- A contractor's annual overhead is $120,000 and expects about $600,000 in direct job costs for the year. To recover overhead evenly, approximately what percentage should be added to each job's direct cost for overhead?
- On a lump-sum project, what is the PRIMARY purpose of the schedule of values?
- A progress payment application shows $80,000 of work completed this period. The contract allows 10 percent retention. How much should the owner PAY for this period after retention is withheld?
- When is a cost-plus-fee contract MOST appropriate?
- How do an 'allowance' and a 'contingency' differ in a bid?
- What is the purpose of a bid bond?
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