The ConsensusDocs 200.1 is the only standard material price escalation clause. This material price escalation clause lists the specific materials affected in a particular project and adjusts the contract price based upon a certain metric, usually an agreed-upon objective market index.
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Combat Price Escalations and Limit Risk During Supply Chain Snarls with Carefully Worded Construction Contracts
The combination of rising prices of raw construction materials and supply chain shortages is a logistical and financial nightmare for the construction industry. The potential for lost profits is huge. The risk of losing your construction business is unthinkable. That’s why the best approach to attacking cost and material uncertainty is to include a price escalation clause in your next construction contract.
ConsensusDocs is the only publisher of a standard material price escalation clause: the ConsensusDocs 200.1 Material Price Escalation Amendment. This material price escalation clause lists the specific materials affected in a particular project and adjusts the contract price based upon a certain metric, usually an agreed-upon objective market index.
What are the benefits of a Material Price Escalation Amendment?
The Material Price Escalation Amendment provides superior risk management strategy and protects owners, suppliers, trade contractors, and general contractors equitably and effectively. Want to keep your company’s financial status healthy, even in the midst of a volatile market? Include the Material Price Escalation Amendment in your next construction contract.
The Material Price Escalation Amendment can be amended to a ConsensusDocs prime construction contract to help the Owner and the Constructor (builder, general contractor, design-builder, or construction manager) negotiate equitable price adjustments for essential materials in a construction project experiencing – or expected to – experience significant, industry-wide cost fluctuation.
When material prices skyrocket or shipping disruptions delay project deadlines, the Material Price Escalation Amendment provides a fair allocation of risk. Additionally, the clause can act as a de-escalation clause if the price goes down, saving the owner money.
The Material Price Escalation Amendment also includes the following mitigation strategies:
- limiting amount of time a bid can be relied upon
- breaking projects into phases
- providing allowances or alternates for materials
- early procurement and storage of materials
- increasing contingency amounts
The Material Price Escalation Amendment may also be considered when tariffs increase or their enforceability is removed.
Bottom line: in a rapidly changing and increasingly uncertain market, the only sure-fire way to protect against price escalation is by including a material price escalation amendment in every construction contract.
Let ConsensusDocs help protect your next project from material price escalation. See sample and purchase options below.