October 8, 2021
ConsensusDocs Price Escalation Resource Center
Material price escalation spikes and supply shortages threaten builders’ financial viability in today’s construction market. ConsensusDocs, the leader in standard construction contracts, has compiled resources below to address price escalation. The best approach is to include price escalation provision, such as the ConsensusDocs 200.1 Material Price Escalation Amendment in your construction agreement at contract signing. Click here to get a free sample of the 200.1. A material price escalation clause adjusts the contract price based upon a certain metric, usually an objective index. Existing contracts that do not contain a price escalation provision can utilize a price escalation amendment if both parties agree. Choosing a reliable material price index that specifically and accurately addresses the prices involved on a particular project is one of the more difficult aspects of drafting a price escalation clause and the below resources now include some indexes that are available for construction.
Owners, Constructors, General Contractors, Subcontractors alike should consider price escalation/de-escalation clauses in these uncertainty times. ConsensusDocs is the only publisher of a standard price escalation clause. The ConsensusDocs 200.1 Standard Time and Price Impacted Materials Addendum and Schedule A is available on all paid subscriptions. “Rather than guessing to price out cost fluctuations, owners and builders would be wise to consider a best practice price escalation clause that is tied to an objective index agreed upon ahead of time, that allow prices to go up, or down. Hope and a contingency fund don’t qualify as a risk management strategy,” says Brian Perlberg, Executive Director and Senior Counsel for ConsensusDocs.
Typically, constructors, subcontractors, and materials suppliers typically bear the risk for cost increases in a firm-fixed or lump sum agreement, even if such increases are unforeseen and not their fault. However, supply shortages, could give rise for excusable performance delay, but paying higher costs for material supplies are usually considered a business risk. Some additional mitigation strategies, include limiting the amount of time a bid can be relied upon; using cost of the work agreements (i.e. ConsensusDocs 230 or 500) rather than lump sum agreements (i.e. ConsensusDocs 205 or 751); breaking projects into phases; providing allowances or alternates for materials; early procurement and storage of materials (see the ConsensusDocs 750.1 Storage Rider); prefabrication (see ConsensusDocs 753 Prefab agreement); or increasing contingency amounts to allow for material price increases.
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Contract Documents
- Click here to get a sample of the ConsensusDocs 200.1 price escalation addendum.
- Subscribe to ConsensusDocs
- ConsensusDocs 200.1 Standard Time and Price Impacted Materials Addendum and Schedule A (Including Price Escalation Elements and Clauses)
- Guidebook to ConsensusDocs 200.1
Examples of Cost indexes
- ENR https://www.enr.com/economics/historical_indices
- DCD cost charts https://www.dcd.com/cost-index
- Turner Cost Index http://www.turnerconstruction.com/cost-index
- Mortenson https://www.mortenson.com/cost-index
- RS Means City Cost Index https://www.rsmeans.com/rsmeans-city-cost-index
- Natural Resources Conservation Service -Price Index with Web Sources
Webinar & Presentations
- Material Price Escalation, Delays, and COVID-19: ConstructorCast Podcast Episode:
- Webinar Recording on Price Escalations & Supply-Chain Disruption: Legal and Practical Remedies and Mitigation webinar.
- Webinar PowerPoint presentation on Price Escalations & Supply-Chain Disruption: Legal and Practical Remedies and Mitigation webinar.
- Soaring Material Prices and Supply Shortages PowerPoint Presentation
Articles & Other Information
- Pricing insanity: Material costs escalate, driving contractor desperation
- De-escalating The Impact of Price Escalation
- Sign-up for the ConsensusDocs Construction Law Newsletter
- Tariffs, Taxes, and Trade Wars: Using Material Price Escalation Clauses to Mitigate Risk in an Uncertain Political Climate
- Negotiating Material Escalation Clauses
- September 2021 Construction Inflation Alert
- Mitigating the Effect of Construction Price Escalations
- Addressing Material Prices
- The Price Isn’t Right: Don’t Get Escalated Out of Business
- Recovery of Material Escalation Costs Arising from Steel and Aluminum Tariffs
Federal Resources
- Federal Acquisition Regulations. Economic Price Adjustment-Labor and Material
- FAR Economic Price Adjustment- fuel surcharge
- Natural Resources Conservation Service -Price Index with Web Sources
State-Level Resources
- Arizona DOT- provision for adjustment of the cost of bituminous material and gasoline fuel
- Nevada DOT covering Asphalt, Fuel and Steel prices
- Ohio Department of Transportation Escalation Clauses: Fuel; Steel; Asphalt; and Cement.
- Price Escalation Clause – West Virginia Department of Highways Fuel and Liquid Asphalt.

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