Which of the following best describes a Unit-Price Contract?

A Unit-Price Contract is defined by its payment structure, which involves billing based on the quantity of work completed rather than a fixed total for the entire project. This method is particularly beneficial in construction and related fields where the scope of work may not be fully known at the outset. For instance, it allows for flexibility, as contractors are paid for each unit of work performed, such as per square foot of flooring laid or per linear foot of piping installed.

This approach enables both the client and the contractor to manage costs more effectively, as payments adjust in real-time to reflect the actual work completed. The project budget can therefore adapt to changes in the amount of work required without exceeding initial estimates, assuming accurate pricing per unit. Such contracts promote efficiency and accountability in measuring progress and expenses.

In contrast, options suggesting an hourly rate or an upfront total payment do not align with the essence of a Unit-Price Contract, which specifically ties compensation to work quantity. Similarly, stating that it is strictly for labor costs overlooks the broader application of unit pricing, which can extend to materials and other project elements beyond labor.