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What You Need to Know About Unit Pricing Contracts Part 2

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In the first part of this two-part article, a Little Rock contractor attorney discussed essential introductory information about unit pricing contracts. In this part, we communicate more specifics about this form of contract.

Benefits for Contractors

Unit pricing contracts allow contractors and subcontractors to reduce the risk associated with estimating quantities needed for materials. Because the price is per unit, it’s easier to add units to the contract thereby adding more flexibility to the contract.

Benefits for the Owner

Project bidding when using unit pricing contracts is much easier than other types of contracts and the owner normally chooses the lowest unit price. Since the contractor or subcontractor provides unit prices, an owner can readily tell if the prices have been exaggerated. Using unit prices helps with scope changes and makes change orders much easier to agree on.

Downsides

A unit price contract is only good for you if your estimate of the cost per unit is accurate. If you underestimate the cost per unit or make the cost low to try to win the bid, you could be in for a loss when the project is completed. Inaccurate estimates also mean that often the project owner will not know the total cost of the job until it is complete.

This contract type is not best for complex jobs, jobs that need small amounts of multiple materials, or jobs that need minute adjustments. There are several other kinds of contracts, such as lump sum, cost plus, and time and materials.

Contract Review

No matter the type of contract, it can be written to benefit one party more than the other. It’s important to carefully read and review any contracts you are considering. Before you sign a unit price contract, you should speak to a Little Rock contractor lawyer from Cotney Construction Law. We have construction industry experience that can help you get a fair contract.

If you would like to speak with a Little Rock contractor lawyer, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.