Unit Price Contract

The Full Picture

Unit pricing exists for the gap between 'we know what the work is' and 'we don't yet know how much of it there'll be.' Earthwork, utilities, paving, and site remediation are classic cases: the design defines the work precisely, but the true quantity depends on conditions that only reveal themselves during construction.

Mechanically, the owner provides estimated quantities for each work item, contractors bid a unit rate against each, and the bid total is the sum of rate times estimated quantity. During construction, actual installed quantities are measured — 'remeasured' — and the contractor is paid the agreed rate times the real quantity. The rate is fixed; the quantity floats.

This structure shifts quantity risk to the owner and keeps productivity risk with the contractor. If more excavation is needed than estimated, the owner pays for the extra units at the pre-agreed rate — no renegotiation, no change order for the quantity itself. That predictability on rate is why public agencies use unit prices heavily for infrastructure and site work.

The discipline in preconstruction is accurate measurement and honest unit rates. Contractors sometimes 'unbalance' a bid — loading rates on items likely to overrun and shaving items likely to underrun — so owners scrutinize unit-rate reasonableness, not just the bottom line. Clean quantity takeoffs on both sides keep the remeasurement honest.