What is typical for a unit price payment arrangement?

In a unit price payment arrangement, payment is based on estimates of the quantity of work completed and the agreed-upon unit prices for specific activities or outputs. This means that as work is performed, payments are made according to the measured quantities of work done at predefined rates. Such an arrangement allows for flexibility in projects where the total scope of work may not be fully known at the outset, enabling adjustments to be made as the project progresses.

The focus on estimates also accommodates variations in the quantity of work, allowing for a more dynamic and responsive payment structure that reflects actual work completed. Engineers and contractors often value this arrangement for its ability to tie compensation directly to performance and progress, rather than requiring fixed fees or up-front payments regardless of work completed.

Other payment structures, such as fixed fees or advance payments, come with different risk profiles and budgeting implications. In contrast, the unit price model emphasizes measured performance and aligns payments with specific deliverables within the project timeline.