Unit Pricing Contracts Drafting and Documentation in Chennai Law Forum
Unit Pricing Contracts Drafting and Documentation in Chennai Law Forum
If a project is repetitive, consists of a lot of similar materials or has an overall price that’s heavily dependent on materials, then using a unit price contract makes a lot of sense. These types of contracts allow contractors to charge owners a per-unit price for their work, so it’s easier to compare bids and come to an agreement on scope changes.
Contractors can also use these contracts to protect themselves against future material prices going up. They can buy large quantities of certain products at one time and bill owners accordingly for their use.
Why You Should Use a Unit Price Contract
Because unit price contracts are so transparent, it’s easy for owners to verify that contractors are charging them a fair price for their work. Likewise, it’s easy for contractors to keep track of their costs, too, so they can make sure they’re staying on budget.
Choosing a unit price contract can be tricky, however. It’s best used where the work can be broken down into identifiable chunks, like a pile of dirt or a house.
Unit price contracts are also referred to as “measure and pay” or “re-measurement” contracts because they are used to make sure that the cost of a project stays accurate over time. This can be difficult for projects that involve a lot of changes or large variations, but it’s essential for keeping projects on budget and making sure that owners are not paying over the top for their work.
