NASCLA Accredited Commercial General ContractorGeneral RequirementsMedium
A commercial general contractor is preparing a bid for a complex multi-story office building. To accurately estimate the project cost, the contractor decides to use a 'unit price' method for certain repetitive elements like concrete pouring and rebar installation. What is the primary advantage of using a unit price approach for these specific project components?
- AIt guarantees that the contractor will not incur any cost overruns on those items.
- BIt provides a fixed total cost upfront, simplifying budgeting for the owner.
- CIt allows for flexibility and fair adjustment of costs based on actual quantities installed.
- DIt minimizes the need for detailed quantity take-offs during the bidding phase.
Show answer & explanationAnswer & explanation
Correct answer: C. It allows for flexibility and fair adjustment of costs based on actual quantities installed.
Unit price contracts allow for adjustments based on the actual quantities of work performed. This is advantageous for repetitive items where exact quantities might be difficult to determine precisely at the bidding stage, ensuring fair compensation for both parties.
Why the other options are wrong
- A. While it provides flexibility, it does not guarantee against cost overruns if the unit price itself is too low or quantities exceed expectations significantly.
- B. A lump-sum contract provides a fixed total cost, not generally a unit price contract.
- D. Detailed quantity take-offs are still essential for unit price bidding to establish the unit rate.
Unit Price Contract
A contract where the contractor bids a price for each unit of work (e.g., per cubic yard of concrete) rather than a single lump sum for the entire project.
- Total project cost varies with actual quantities.
- Common for projects with uncertain quantities (e.g., excavation, roadwork).
- Requires detailed measurement of completed work for payment.
Memory trick: Unit price: pay for exactly what you get, by the piece.