Unit price contract
| Unit price contract |
|---|
| See also |
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
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
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 construction,
- Highway construction,
- Transportation agencies,
- Other construction projects, especially heavy ones.
Footnotes
- ↑ Zhanga Hao, Liu Chengbin, Gaoc Xiuqing (2016)
- ↑ Brewer Kenneth A., American Association of State Highway and Transportation Officials (2007), p.261
- ↑ Stewart Rodney D., Wyskida Richard M., Johannes James D., p. 356
- ↑ Brewer Kenneth A., American Association of State Highway and Transportation Officials (2007), p.261
- ↑ Mandella Svante and Nilssonb Jan-Eric (2010)
- ↑ Brewer Kenneth A., American Association of State Highway and Transportation Officials (2007), p.261
References
- Brewer Kenneth A., American Association of State Highway and Transportation Officials (2007), AASHTO Maintenance Manual for Roadways and Bridges Knovel Library, AASHTO, USA
- Ewerhart, Christian and Fieseler, Karsten (2003), Procurement Auctions and Unit-Price Contracts in "RAND Journal of Economics, Vol. 34, No. 3", University of Zurich, Swiss, Available at SSRN: www.ssrn.com 11.04.2019
- Mandella Svante and Nilssonb Jan-Eric (2010), A Comparison of Unit Price and Fixed Price Contracts for Infrastructure Construction Projects , Available at www.researchgate.net 11.04.2019
- Stewart Rodney D., Wyskida Richard M., Johannes James D. (1995), Cost Estimator's Reference Manual. New Dimensions In Engineering Series, John Wiley & Sons, Canada
- Zhanga Hao, Liu Chengbin, Gaoc Xiuqing (2016), Study on the Price Types of Construction Contracts for Construction Works in "Advances in Social Science, Education and Humanities Research, volume 63", International Conference on Advances in Management, Arts and Humanities Science ASCE China, Available 11.04.2019
Author: Andżelika Stefańska
