Lump sum
You give one price for all the work in the documents. You carry the quantity risk. If your takeoff is short, you pay for the difference. If you build it for less, you keep the difference. Most plan-and-spec subcontractor bids are lump sum.
Unit price
You give a price for one unit of work, such as a cubic yard of rock excavation. The owner pays for the quantity that is measured in the field. The owner carries the quantity risk. You carry the risk that your price per unit is too low.
Time and materials
The customer pays for your labor hours at agreed rates, plus materials with an agreed markup. The customer carries most of the cost risk. Many T and M agreements include a not-to-exceed amount. You must keep daily tickets and get them signed.
When each one fits
- Lump sum fits when the scope is fully drawn and specified.
- Unit price fits when the type of work is known but the quantity is not.
- Time and materials fits when neither the scope nor the quantity can be defined.
One bid form can use all three. The base bid is lump sum. The form also asks for unit prices to add or deduct work. Later, small changes in the field are done on time and materials. Read the bid form to see what the owner asks for.
What the takeoff means in each
- In a lump sum bid, the takeoff is your risk. Check it hard.
- In a unit price bid, the takeoff tells you the scale of the job and your crew size.
- In time and materials work, the takeoff becomes a budget to track against.
Unit prices on a bid form must include overhead and profit. Do not write your raw unit cost in that box.
Bidding and estimating · Updated 11 Nov 2026