What are the two methods of pricing subcontractor work?

The correct answer is centered on the two primary methods commonly used for pricing subcontractor work: lump sum and unit pricing.

Lump sum pricing involves a single fixed price for the entire scope of work outlined in the contract. This method is beneficial when the project scope is well-defined and unlikely to change significantly. It provides certainty for both the contractor and the client regarding the total project cost, as it simplifies budgeting and financial forecasting. In lump sum contracts, the subcontractor agrees to complete the work for a specified amount, thereby taking on the risk of any unforeseen costs.

Unit pricing, on the other hand, breaks down the work into individual units with a specific cost assigned to each unit. This method is used when the work is difficult to quantify fully at the outset, allowing for flexibility as the project evolves. It is particularly useful in scenarios where quantities may change during the course of the project, such as in excavation or paving, where the exact amount of material or labor needed cannot be determined until the project is underway. This method allows for adjustments to be made based on actual quantities used, with payment made according to the agreed-upon unit rates.

Together, lump sum and unit pricing provide distinct mechanisms that can cater to the varying needs and uncertainties in construction