The basic difference
- Lump sum (stipulated sum): one price for the complete scope. Quantity overruns are generally the contractor’s risk unless the scope changes.
- Unit price: a price per unit for each bid item. Payment follows measured quantities, so the owner carries more quantity risk.
- Combined: many public works bid forms list lump sum items, such as mobilization, alongside unit price items.
Where each type is used
Unit price bidding is common where quantities cannot be known precisely in advance, such as earthwork, paving and utilities, and on many state DOT lettings. Lump sum bidding is common for building work with well-defined plans and specifications.
Pricing unit price items
Each unit price should cover direct cost and an appropriate share of overhead and profit for that item. Check the owner’s estimated quantities against your own takeoff, and read how quantities will be measured and paid.
Common mistakes
- Extension errors: unit price multiplied by quantity does not equal the item total.
- Blank items left unpriced.
- Unbalanced pricing that shifts cost between items, which some owners may reject.
- Ignoring the contract’s rule for whether unit prices or extended totals govern when they conflict.
How Bidmere helps
Bidmere prepares quantity takeoffs and bid estimates and checks bid form math before review. Your team sets final prices.
Common questions
Which carries more risk for the contractor?
Lump sum, because the contractor generally absorbs quantity overruns within the defined scope.
What is an unbalanced bid?
A bid where some unit prices are set unusually high and others low relative to cost. Owners may reject materially unbalanced bids.
What governs if a unit price and extension disagree?
The contract documents usually say. Many public owners treat the unit price as governing.