Definition Unit Price Agreement

However, it is not too difficult to set a fair price for each cargo. Unit price contracts are used for many other projects, trades and tasks, but nevertheless – it is a good way to develop around the concept. That`s the fun part! All costs related to the completion of this work unit can be included in the price. This includes not only the cost of materials, but also others, less obvious. Deviations from the estimated quantities are expected to result in a proportionate increase or reduction in the contract price. Probably the simplest example of a unit price contract is the payment of dirt by the load. You may not know exactly how many loads are needed, so choosing an overall price at first may not make much sense. This type of contract is suitable for large public works, such as infrastructure projects, which involve repetitive tasks and easily quantifiable resources. However, when a project involves several complex trades and activities, it is not particularly appropriate, as it can be difficult to accurately predict the quantities needed for each unit. Individual price contracts offer mutual benefits for both the owner and the contractor. If the owner has chosen a “good” advisor, they can rely on volume readings and accurate schedule estimates. Since work rates are set in advance, construction can begin before the complete design is completed.

This is ideal for projects for which the workload can only be clearly defined after the completion of the preliminary work.

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