What characterizes a unit-price contract?

A unit-price contract is characterized by payments that are based on the actual quantities of materials or work performed rather than a fixed price per project. This approach allows for flexibility, especially in projects where the exact quantities are uncertain at the outset. As work progresses, contractors are paid for the units of work they complete—whether that's a square foot of paving, a cubic yard of excavation, or other measurable items.

This system is beneficial in construction projects where the scope can change or where unexpected conditions arise, making it impractical to establish a fixed price beforehand. The unit-price model ensures that contractors are compensated fairly for the work completed according to the quantities utilized, helping to manage costs and budgets while providing clarity on expenditures.