Utah General Contractors - Business and Law Practice Exam

What type of estimate is characterized by flexibility in cost changes during project execution?

1. Unit price estimate

2. Lump sum estimate

3. Time and material estimate

4. Fixed price estimate

The correct answer is: Time and material estimate

The type of estimate that is characterized by flexibility in cost changes during project execution is the time and material estimate. This approach is designed to account for the actual costs of labor and materials as they are incurred, rather than fixing a total price upfront. In a time and material estimate, the contractor charges the client based on the actual time spent on the project and the cost of materials used. This means that if the project requirements change or unexpected issues arise, the costs can be adjusted accordingly to reflect those changes. This flexibility allows for greater adaptability in project management, particularly in complex or dynamic construction situations where the scope of work may not be fully defined at the outset. On the other hand, other types of estimates, such as unit price, lump sum, and fixed price estimates, involve more rigid pricing structures. These types typically set a specific price for the entire project or per unit of work, which could lead to disputes and complications if changes occur after the contract has been signed. Therefore, the time and material estimate is the most suitable option for projects requiring adaptability to cost fluctuations during execution.