In a unit-price contract, what dictates the contractor's payment?

In a unit-price contract, the contractor's payment is determined by the actual quantities of work completed at the agreed-upon unit price. This type of contract allows for flexibility in the project's scope, as it accommodates changes in the quantities of materials and work needed to complete the project.

When the project progresses, the contractor tracks the actual quantities of work done, such as the number of cubic yards of concrete poured or the length of electrical wiring installed, and invoices based on those actual quantities multiplied by the established unit prices. This approach ensures that the contractor is compensated fairly for the work performed, reflecting the real-time costs and needs of the project.

This is in contrast to predetermined costs or fixed sums for profit, which do not adapt to the changing scope of work. The original bid amount might have been based on estimations that change as the project advances. By focusing on the actual quantities used during the project, unit-price contracts offer a practical and equitable method for managing contractor payments, especially in projects where the scope may not be clearly defined upfront.