Contractor License Practice Exam

Which of the following is true regarding unit price estimates?

1. They require an estimate of total project costs

2. They assign costs to each individual amount of construction work

3. They include only labor and no materials

4. They are only used for commercial projects

The correct answer is: They assign costs to each individual amount of construction work

Unit price estimates are a method of pricing construction work where costs are assigned to individual items or units of work. This approach allows estimators to break down the project into smaller components, making it easier to manage and assess costs on a more granular level. Each unit, whether it be a cubic yard of concrete, a square foot of drywall, or a length of road paving, has a predetermined price that reflects the average cost to complete that part of the work. This pricing method is particularly beneficial for projects where quantities may be uncertain at the outset, as it provides a flexible way to adjust costs based on the actual amount of work performed. By using a unit price, contractors can more accurately reflect adjustments in project scope or changes in material prices. In contrast, the other choices present limitations or misconceptions about unit price estimating. The method does not inherently require an estimate of total project costs, as it can function primarily on a per-unit basis. Additionally, unit price estimates do incorporate both labor and materials, reflecting the total cost associated with the individual units of work. Finally, this estimating method is not restricted to commercial projects; it is widely used across various types of construction, including residential and infrastructure projects.