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  • Kinjal Shah

Unit Price Contract

  • Dec 27, 2021 | Kinjal Shah

A construction project is a collection of complex processes. one among the various ways in which construction contracts might vary is the method used to determine the price for the work. Among different methods, the most common method used is Unit Price Contract.

Unit pricing is a unique way of comparing similar products to find the best value. It breaks down and prices of an entire project into quantifiable “units,” rather than determining a fixed project price.

Costs included in Unit Price Contract

  • Labor costs

  • Material costs

  • Overhead costs

  • Profit

  • Taxes

  • Permit and Inspection Costs

When to use Unit Price Contract

  • It can be used where projects are repetitive or the price is heavily dependent on materials

  • Commonly used when a design is incomplete and execution is to be done

  • Can be helpful in complex projects that involve blending activities between different trades or materials

  • Use when total quantity is not clear like public construction projects


Unit price contracts need a lot of work from consultants and contractors however will be beneficial in several ways throughout the bidding part and the construction of the project. Some of its advantages are,

  1. Great for comparing bids

  2. Additions or Deletions are easy and fair

  3. Increased Transparency and Fairness

  4. Progress Billing and Invoice Certification

Conclusion: A unit price contract estimates costs based on quantifiable, predetermined units of work. A unit price includes costs of labor, material, equipment, and overhead, with profit also built-in.

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