Price escalation and volatil ity in construction material pricing has plagued the construction industry for at least the last 18 months as one of the fallout results of the COVID-19 pandemic. While price escalation is cyclical in the construction industry, the soaring prices for certain building materials has been unprecedented and, in some respects, determines the profitability or even viability of projects. To follow, is guidance and recommendations to navigate and deal with the economic uncertainties that stem from material price escalation.
PRICE ESCALATION PROVISION
In a perfect situation, you’re protected from significant price fluctuations by a price escalation provision that affords an abil ity to seek relief in the event of pricing changes. While price escalation provisions were hardly considered in negotiations of the past, these provisions have become front and center today because of the current market conditions. Generally, these provisions provide for an adjustment in the event pricing increases, sometimes based on general increases and other times based on specific criteria like specified materials or a threshold percentage.
Read the full article in the PDF below.
PRICE ESCALATION PROVISION
In a perfect situation, you’re protected from significant price fluctuations by a price escalation provision that affords an abil ity to seek relief in the event of pricing changes. While price escalation provisions were hardly considered in negotiations of the past, these provisions have become front and center today because of the current market conditions. Generally, these provisions provide for an adjustment in the event pricing increases, sometimes based on general increases and other times based on specific criteria like specified materials or a threshold percentage.
Read the full article in the PDF below.
