Louisiana Contractors License Practice Exam

What does a unit price contract require from the owner regarding project completion?

1. Measurement of total units installed

2. Pre-approval of all changes

3. Estimation of labor costs

4. Guarantee of a fixed budget

The correct answer is: Measurement of total units installed

In a unit price contract, the owner is required to measure the total units installed to determine the final payment for the work completed. This type of contract specifies a price per unit of work, allowing for flexibility in scope as the project progresses. As construction work is completed, the owner assesses the actual quantity of units installed, which directly influences the total cost. This approach is beneficial in projects where the final quantities can be uncertain at the outset, ensuring fair compensation based on actual work performed rather than a predetermined total amount. The other options relate to different aspects of contract management and do not reflect the primary requirement of a unit price contract regarding project completion metrics. Pre-approval of all changes speaks to change management processes typically found in fixed-price contracts, while estimation of labor costs may be relevant in various contract types but is not a core requirement of a unit price contract. Similarly, a guarantee of a fixed budget aligns more closely with lump-sum contracts, where the total price is agreed upon upfront, contrasting with the variable nature of unit price agreements.