Utah General Contractors - Business and Law Practice Exam

What type of estimates assigns a cost to each measurable item of work listed separately?

1. Lump sum estimates

2. Unit price estimates

3. Time and material estimates

4. Cost-plus estimates

The correct answer is: Unit price estimates

Unit price estimates assign a cost to each measurable item of work listed separately, allowing for an organized breakdown of project costs. This method is particularly useful in construction projects, as it provides a detailed accounting for each component or activity within the overall scope of work. This granular approach means that when a contractor or estimator calculates the total project cost, they can accurately multiply the unit price for each item by the quantity required, leading to a precise estimation of total project costs. By contrast, lump sum estimates provide a total price for the entire project without itemizing the specific components, making it less detailed. Time and material estimates involve billing for the actual time spent and materials used without establishing a fixed cost beforehand. Cost-plus estimates, similarly, cover the actual cost of construction plus a fixed fee or percentage for profit, rather than providing a breakdown of costs for each item. The structure of unit price estimates allows for flexibility in cases where quantities may fluctuate, providing a clear mechanism for adjustments in pricing based on actual work done.