Unit price work in construction documents

The purpose of construction documents is to enable the contractor to provide the owner with a set price. For the contractor to establish a set price, the exact quantity of work has to be shown in the construction documents. Sometimes the exact quantity of items required for the work has not been decided or cannot be determined with precision at the time a bid is submitted. The construction documents may therefore provide that all or part of the construction work will be unit price work and for the purposes of the initial contract price, the amount of the unit price work will be established by multiplying the estimated quantity of each item by the unit price of that particular item. The construction documents typically state that the estimated quantities of items of unit price work are not guaranteed and are solely for the purpose of comparison of responsive bids and determining an initial contract price. Furthermore payments to the contractor for unit price work will be based on actual quantities.

During construction, the design professional has to determine the actual quantities of the unit price work performed when reviewing pay applications and render an affirmative decision about the amount of work performed. It is essential that the design firm carefully monitor the unit price work being done and communicate to the client about deviations encountered during construction. If the actual quantities are generally in line with the design professional’s initial estimated quantity, the construction proceeds as intended. If, however, the actual quantities encountered during construction are materially and significantly different from the initial estimated quantities, and the contractor’s unit costs to perform the unit price work have changed significantly as a result, the contractor or client typically are entitled to an adjustment in the unit price. It is important that the design professional notify both the client and contractor as soon as they notice the significant difference in quantities. For example, if the actual quantities encountered are significantly more, the client will probably have to pay more to account for the increase, but the unit pricing will in all likelihood be reduced since the contractor’s actual unit costs to perform the work are not as high. Ultimately, the overall change in contract price has to be fair to both the client and contractor.

In their construction contract administrator role, the design professional has to be alert to significant changes to the expected unit price work and help the client and contractor execute a timely change order to reflect the updated conditions. The design professional’s failure to advise the client of the changed quantities encountered in construction could expose the firm to negligence claims for failing to advise the client of the changed condition that necessitated a change order.

Standard form documents, such as AIA A201, General Conditions of the Contract for Construction, and EJCDC C700, Standard General Conditions of the Construction Contract, set forth the requirements for unit price work. Design professionals should review their agreements to determine their responsibilities for determining unit price work and be aware of the requirements for unit price work in the general conditions of the construction contract between client and contractor so that they can affirmatively carry out their responsibilities for determining the unit price amounts and processing any associated change orders related to changed quantities.

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