Contracts & ExecutionQuestion 822 of 1605
A unit-price contract is most appropriate when:
a.The owner wants a single fixed total with no measurement
b.The parties want to bill only by the hour
c.The entire scope and quantities are precisely known in advance
d.The exact quantities are uncertain, so the parties agree on a price per unit (for example, per cubic yard of excavation)
Explanation
A unit-price contract sets a price per unit of work, such as per cubic yard of excavation or per linear foot of pipe, and the final total is the unit price multiplied by the actual measured quantities. It suits projects where quantities cannot be pinned down in advance, like earthwork. When quantities are precisely known, a lump sum fits better; unit pricing specifically handles quantity uncertainty by measuring actual work performed.
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- Which contract type places the greatest risk of cost overruns on the contractor rather than the owner?
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