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A201®–2017, General Conditions of the Contract for Construction

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October 26, 2023

In construction contracts, unit prices refer to the cost per unit of a particular item that is included as part of the contractor’s work. These prices are commonly specified to provide clarity and standardization when estimating and accounting for various materials during construction. By using unit prices, both contractors and owners can ensure fairness and accuracy, particularly when dealing with quantities that may change throughout the project’s duration. 

Here’s a breakdown of key aspects of unit prices and how they work in construction contracts: 

What Are Unit Prices in Construction Contracts?

Unit prices are typically expressed in terms of a standard unit of measurement such as per square foot, per linear foot, per cubic yard, or per piece. This standardized approach helps avoid confusion and ensures that both parties understand exactly how the materials or labor are being priced. 

Why Use Unit Prices in Construction?

1. Flexibility for Contractors

Unit prices offer flexibility in construction projects because they allow for adjustments based on the actual quantities required during construction. Often, the precise quantity of materials or labor isn’t known at the time of contracting. In such cases, unit prices allow the contractor to adjust costs according to the actual amount of work done or materials used. 

2. Standardized Measurement for Clarity

With unit pricing, both contractors and owners have a clear understanding of the measuring units involved, reducing the risk of confusion or disagreements. Whether it’s cubic yards of concrete or feet of piping, unit prices ensure that calculations are consistent and verifiable. 

How Are Unit Prices Calculated?

When the work is performed, the contractor measures the actual quantity of a particular item used in the project and calculates payment by multiplying the quantity by the unit price. While unit prices are often quoted based on estimated quantities, the contractor is compensated for the actual quantities used during the project, even if these quantities differ from the initial estimate. 

Handling Change Orders and Variations in Unit Prices

Unit prices are particularly useful when change orders arise during a project. If additional work is required, or if the quantity of a particular item changes, the contract can be adjusted based on the unit prices outlined in the contract. This flexibility is crucial for managing unexpected costs or changes in scope. 

AIA Contract Documents: A201 Section 9.1.2

The AIA’s General Conditions of the Contract for Construction (A201®-2017) outlines the procedures for adjusting unit prices when actual quantities deviate significantly from the original estimates. According to Section 9.1.2, if the unit prices stated in the contract result in substantial inequity due to material changes in quantity, the unit prices may be adjusted equitably. This ensures that neither party suffers undue financial hardship due to unforeseen changes in project scope. 

For instance, if there is significant material price escalation or unexpected increases in the required quantities, the parties may agree on a percentage variation to avoid disputes over what constitutes a “material change” under this clause. 

Best Practices for Using Unit Prices in Construction Contracts

• Clear Definition: Ensure that unit prices are clearly defined and that the unit of measurement is well-understood by both parties. This helps avoid misunderstandings or disputes down the line. 
• Adjustments for Fairness: Always include provisions in the contract that allow for equitable adjustments in unit prices if quantities change significantly during the project. 
• Regular Review: Both parties should regularly review actual quantities and make necessary adjustments to ensure that the final payment reflects the true scope of work. 

Conclusion

Unit prices are a crucial tool in construction contracts, offering flexibility, transparency, and fairness in managing project costs. By clearly defining unit prices, using standardized units of measurement, and allowing for adjustments when quantities change, both contractors and owners can protect their interests and minimize disputes. Ensure that your construction contracts reflect these best practices for smooth project execution and financial clarity. 

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.