Unit price contract

Unit price contract
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Methods and techniques

Unit price contract (also called UPC) has below characteristics[1][2]:

  • definied scope agreed before such as amount of work (10% is enough),
  • relatively fixed prices that are adjusted only within the agreed scope,
  • quantities (units) in the bill are integral part of the contract,
  • payments of contract are based on completed work so there are series of payments for various materials and labour assigned to each of them in detailed way when work is done,
  • despite contact is definied in details upfront, part of the contract might also include long-term repair deal if needed (for example it might be often beneficial solution for bridge building when repairs will be probably less expensive than than replacement of the whole construction).

Control of unit price contract[edit]

There is no need to make research before estimation of payments to the whole contract value, however it is important to compare plan with ready project as the contact might be used to artificially increase the profit. Therefore, the project should be controlled during work is ongoing to check status versus planned scope and value[3][4].

Examples where unit price contact is used[edit]

Unit price contract is used mainly for heavy construction projects for example by a government agency and engineers with exact quantities which will execute the project. This kind of contract seems to be optimal approach for infrastructure construction projects[5]. Examples where unit prices contract is used are below[6]:

  • Bridge contruction,
  • Highway construction,
  • Transportation agencies,
  • Other construction projects, especially heavy ones.

Footnotes[edit]

  1. Zhanga Hao, Liu Chengbin, Gaoc Xiuqing (2016)
  2. Brewer Kenneth A., American Association of State Highway and Transportation Officials (2007), p.261
  3. Stewart Rodney D., Wyskida Richard M., Johannes James D., p. 356
  4. Brewer Kenneth A., American Association of State Highway and Transportation Officials (2007), p.261
  5. Mandella Svante and Nilssonb Jan-Eric (2010)
  6. Brewer Kenneth A., American Association of State Highway and Transportation Officials (2007), p.261

References[edit]

Author: Andżelika Stefańska