# Unit Rate Contract vs Lump Sum

> A unit rate contract pays an agreed rate for each unit of measured work. See how it differs from a lump-sum contract, with a worked earthwork example.

Canonical: https://superwise.site/glossary/unit-rate-contract/
Last updated: 2026-11-01

A contract that pays the contractor an agreed rate for each unit of work, so the final cost follows the quantities actually measured.

## What is Unit Rate Contract (Item Rate)?

A Unit Rate Contract, also called an Item Rate Contract, is the most common form of construction contract in India. The client does not agree one lump-sum price for the whole building. It agrees a rate for each item, for example ₹5,000 per cu.m of concrete and ₹60 per kg of steel, and the final cost follows the quantities measured on site.

## Practical example

A developer signs an item rate contract for earthwork at ₹300 per cu.m. The [BOQ](https://superwise.site/glossary/bill-of-quantities/) estimated 1,000 cu.m, a budget of ₹3,00,000. During excavation the contractor hits hard rock, has to dig wider and ends up excavating 1,200 cu.m. Under the contract the developer pays ₹3,60,000 (1,200 × ₹300).

## In SuperWise

In SuperWise each [work order](https://superwise.site/glossary/work-order/) line ties a BOQ item to a contracted quantity and a contracted rate, and [RA bill](https://superwise.site/glossary/running-account-bill/) lines take their quantities from approved measurement sheets. The cumulative billed quantity of a line cannot pass its contracted quantity. A change in scope or rate after approval is made by amending the work order, which raises its revision number.

[RA bill software](https://superwise.site/features/ra-bill-certification/)

## Related terms

- [Bill of Quantities (BOQ)](https://superwise.site/glossary/bill-of-quantities/)
- [Work Order (WO)](https://superwise.site/glossary/work-order/)
- [Running Account bill (RA bill)](https://superwise.site/glossary/running-account-bill/)

## Related
- [Bill of Quantities (BOQ)](https://superwise.site/glossary/bill-of-quantities/)
- [Work Order (WO)](https://superwise.site/glossary/work-order/)
- [Running Account bill (RA bill)](https://superwise.site/glossary/running-account-bill/)
- [RA bill software](https://superwise.site/features/ra-bill-certification/)