Estimating Practice Exam

Which type of contracts utilizes a pricing schedule that breaks down work and estimated quantities?

1. Cost-plus contracts

2. Unit-price contracts

3. Fixed-price contracts

4. Time and materials contracts

The correct answer is: Unit-price contracts

Unit-price contracts utilize a pricing schedule that breaks down work into identifiable units and estimated quantities. This approach allows contractors to provide a price per unit of work, which means that payment is based on the actual quantities of work completed during the course of the project. For example, if a construction project involves laying asphalt, the contract would specify a price per square yard, and the total cost would depend on how many square yards are actually paved. This type of contract is particularly beneficial in situations where the exact quantities of work required are not known at the outset. It allows for flexibility and helps to manage the risks associated with variable quantities, as the contractor is compensated based on what is actually performed. In contrast, the other types of contracts, such as cost-plus contracts, fixed-price contracts, and time and materials contracts, have different structures that do not focus on an itemized pricing based on units completed.