contracts play a prominent role in civil construction and infrastructure projects. They are used when it is not possible to determine the exact quantity of work at the time of contracting, offering flexibility and adaptability in execution. In this model, payment is calculated by multiplying the previously agreed unit prices by the quantities actually executed and approved.

While this method offers advantages, it also carries significant risks. Variations in estimated quantities, changes in execution conditions, and discrepancies in measurements can have a direct impact on the final cost and delivery times. Therefore, risk management is essential to avoid losses and maintain contractual balance.

What characterizes a unit price contract?

A unit price contract defines a fixed value per unit of measurement for each work item. Payment is based on the quantities actually executed, measured, and approved throughout the project. 

This model is common for services whose quantities vary depending on actual execution conditions, such as earthmoving, paving, sewage network installation, and road maintenance. However, this same flexibility requires rigorous monitoring and constant communication between the parties to avoid disagreements.

Most frequent risks in unit price contracts

Variation of quantities

The first vulnerability lies in the difference between estimated and actual quantities. When the variation is significant, the final contract value can increase substantially, compromising the budget or reducing profit margins.

Unforeseen execution conditions

Soil changes, underground disturbances, or adverse weather conditions may require more time, labor, and materials, increasing quantities beyond what was initially anticipated.

Inaccurate measurements

Accurate measurements are essential to ensure that payments correspond to actual payments. Recording errors or discrepancies in the criteria adopted often lead to disputes.

Productivity and operating costs

If productivity falls short of expectations, the agreed unit price may not be sufficient to cover costs, resulting in a loss for the contractor.

How to manage risks effectively

Risk management in unit price contracts begins in the planning phase and extends through final delivery.

Realistic estimates

Preparing detailed estimates based on topographic surveys, soil studies, and references from similar projects is the starting point. The more accurate these estimates are, the lower the likelihood of critical deviations.

Clear measurement criteria

The contract must clearly specify how measurements will be performed, their frequency, unit standards, and accepted tolerances. This care prevents conflicting interpretations and ensures transparency.

Continuous monitoring

Regular monitoring of quantities executed allows for the identification of trends of increase or reduction and enables preventive adjustments in the planning or negotiation of additives.

Formal change control

Changes in scope must be formally recorded and evaluated prior to execution. This prevents additional services from being performed without appropriate compensation or contractual adjustments.

Balanced risk allocation

It's crucial to define in the contract how unforeseen situations will be handled, preventing the entire burden from falling on just one party. The risk matrix is ​​an important tool for this definition.

The importance of well-drafted contractual clauses

Price adjustment and update

Including clauses that provide for monetary restatement or adjustment of unit values ​​is essential to protect the parties against significant variations in input costs.

Economic-financial rebalancing

This clause ensures that, in unforeseen situations that substantially alter the cost of execution, the contract can be adjusted to maintain its initial balance.

Variation limits

Defining quantity variation ranges that do not alter unit prices and establishing mandatory negotiation above these limits brings predictability and avoids conflicts.

Measurement and payment procedure

The contract should specify how measurements will be taken, what documents will be required, and payment terms. This definition ensures greater control and reduces disputes.

Technology to support risk management

The adoption of technology is a differentiator to reduce risks in unit price contracts.

Construction management systems

Specialized software allows you to record measurements digitally, attach photos, and generate automatic reports, facilitating monitoring and auditing.

BIM Modeling

The use of Building Information Modeling enables more accurate estimates and constant quantity updates, integrating design and execution.

Remote sensing and drones

These tools are ideal for measuring large or hard-to-reach areas, ensuring accurate and fast measurements.

Prevention and positive outcome

In a water network project, the contract called for 50 kilometers of piping at a unit price per linear meter. During execution, more precise mapping indicated the need for 55 kilometers to meet demand. 

Because the contract provided for negotiations for variations above 5%, it was possible to adjust prices and deadlines before the additional section was completed. The result was a balanced balance between cost, deadline, and quality.

Best practices for contractors and contractors

Maintaining open and documented communication is one of the most effective practices for avoiding conflicts. Regular reports, follow-up meetings, and joint inspections strengthen the relationship between the parties. 

Regularly reviewing the physical-financial schedule also helps detect deviations in time for correction. Training teams, especially those responsible for measurements, is essential to ensure the consistency and accuracy of the data collected.

Controlled risks, safer contracts

Unit price contracts offer flexibility and adaptability, but require constant monitoring. By investing in accurate estimates, clear measurement criteria, continuous monitoring, and technology, it's possible to reduce uncertainty and avoid losses.

With well-structured clauses and efficient management practices, this contractual model can become a safe and advantageous instrument for all parties involved.