Unit Price Contract
A contract type that prices the work per unit of measured quantity, such as per cubic yard of concrete or per linear foot of pipe, rather than one lump sum, with the final contract value determined by multiplying the actual quantities installed by the agreed unit prices.
Why it matters
It works well when the general scope is known but exact quantities aren't: heavy civil and utility work, for example, where the exact amount of excavation or pipe needed isn't fully knowable until the work is underway. Both sides share risk more evenly than a lump sum: the contractor isn't stuck absorbing a quantity overrun, and the owner isn't stuck paying a padded lump sum for quantities that turn out lower than expected.
On a real project
A road paving contract prices asphalt at a fixed rate per ton and pays out based on the actual tonnage installed, rather than one flat total, since the exact paving quantity isn't precisely known until the road is fully measured.
Who this matters most to
An Estimator sets the unit prices carefully, since a unit priced too low on a quantity that turns out much larger than expected can lose money even though the rate looked reasonable on paper. A Quantity Surveyor measures actual installed quantities against the contract's unit prices to determine what's actually owed as the work progresses.
Where this goes wrong
A contractor prices excavation too low per cubic yard, assuming the quantity will stay close to the estimate. The actual site conditions require far more excavation than anticipated, and because the contract pays per unit, the contractor loses money on every additional yard removed instead of being protected by a fixed total price.