Author Question: Explain the difference between unit price and lump sum contracts? What will be an ideal ... (Read 60 times)

bio_gurl · **on:** Jul 26, 2018

Explain the difference between unit price and lump sum contracts?

What will be an ideal response?

Question 2

Why is it important to have accurate baselines before a project starts and what establishes the baselines?

What will be an ideal response?

ricroger · **Reply #1 on:** Jul 26, 2018

Answer to Question 1

Unit price contracts provide an estimated cost for each designated unit that includes the labor, materials, equipment, overhead, and profit for each particular unit of work. Lump sum contracts provide one estimated price to build a construction project but they could also include unit prices for each major work item.

Answer to Question 2

Baselines are established by the construction estimate that is developed by contractors. It is important to have accurate baselines because the progress of a project and progress payments are measured against the original baseline estimates and schedules.