Unit Price Contract Is Also Called as

A unit price contract, also known as a measure-and-pay contract, is a type of contract used in construction and other industries. It is a contract where the final price is calculated based on the actual quantities of work performed or materials used, rather than a fixed price negotiated in advance.

Unit price contracts are commonly used in projects that involve a variety of work items or materials. The contract includes a detailed bill of quantities that lists the quantities and prices of each item involved in the project. The contractor is then paid based on the actual quantities of work completed or materials used, multiplied by the unit price specified in the contract.

This type of contract differs from a lump-sum contract, where the contractor is paid a fixed amount regardless of the actual quantities of work completed or materials used. It also differs from a cost-plus contract, where the contractor is paid the actual cost of the work plus a profit margin.

Unit price contracts are beneficial for both the contractor and the client. For the contractor, it provides an opportunity to earn additional profit by maximizing efficiency and reducing waste. It also provides protection against unforeseen circumstances or changes in the project scope, as the contract is based on actual quantities rather than estimates.

For the client, a unit price contract provides transparency and accountability. The client can monitor the progress of the project and ensure that they are only paying for work that has been completed. It also provides the flexibility to make changes to the project scope as necessary, without having to renegotiate the entire contract.

In conclusion, a unit price contract is a flexible and transparent contract that benefits both the contractor and the client. It allows for accurate pricing and provides protection against unforeseen circumstances, making it a popular choice in the construction industry.

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