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What is the typical purpose of a unit-price contract?

  1. To facilitate large projects quickly

  2. To establish costs based on estimated quantities

  3. To minimize financial risk for contractors

  4. To provide detailed project designs

The correct answer is: To establish costs based on estimated quantities

A unit-price contract is primarily designed to establish costs based on estimated quantities of work items that will be required for a construction project. This type of contract allows the contractor to bid on individual components of a project, with a set price assigned to each unit of work. It is particularly useful in projects where the exact quantity of work cannot be known ahead of time, such as excavation or roadwork. By using unit pricing, the financial impact of changes in the work or quantities can be better managed, as the contractor is paid for the actual amounts of work completed. In contrast, other options may relate to different kinds of contracts or objectives within construction management. For instance, while facilitating large projects quickly might be an advantage of certain contract types, it does not capture the essence of what a unit-price contract is fundamentally about. Similarly, minimizing financial risk is a broader objective more commonly associated with fixed-price contracts or cost-reimbursable agreements. Providing detailed project designs aligns more closely with design-bid-build contracts, where design details are a significant focus before construction begins. Therefore, the primary purpose of a unit-price contract is indeed to establish costs based on estimated quantities, making the selected answer the most appropriate.