UNIT PRICE AGREEMENT
In a Unit Price Agreement the Contractor is paid a pre-determined amount for each unit of material or labor cost added to a project.
Contractor Risks: The Owner misunderstands the impact of changing prices during the construction period, resulting in disappointment or hard feelings.
Owner Risks: Expected budget may escalate dramatically if hidden conditions demand costly changes in the work. Note however that this risk is also possible under various project delivery contract arrangements.