Definition : Flat-rate unit price contract

Contract by which a contractor or service provider undertakes to provide a service for a fixed price per work unit. The total price will be determined by multiplying the quantities actually carried out or supplied by the agreed unit price and according to the work actually carried out.  Although the total amount is not known at the outset, it should be noted that the unit price has a flat-rate aspect in that it includes, for a work unit, all the burdens on the contractor, and cannot be modified (unless there is an amendment).  In large-scale projects, some public or private contracts provide for a level, usually 15%, beyond which unit costs must be renegotiated in the event of exceeding the quantities estimated in the contract.