Southern Door & Plywood

Price Escalation Clauses – Negotiate a price escalation clause that works for you. There is no uniform clause that fits every contract but consider using a clause allowing for a triggering price that can adjust both upward and downward.

Document – Make sure to continue your review of material prices throughout the course of the project, and keep detailed documentation of price changes along with potential supply chain disruptions that may impact work.

Early Purchasing – If possible, allow parties to pre-purchase, and be paid for, materials which can be ordered early and which may be particularly susceptible to volatility.

Communicate – Be sure there is open communication between the parties. Open and comprehensive communication can lead to mitigation efforts by all parties. If a contractor is faced with unanticipated price escalation, promptly advise the upstream party to work together to come up with alternative materials or revised plans for the project.

Overall, there is always one common goal – timely and acceptable project completion. If parties execute these steps, they can work together toward that common goal through de-escalating the impact of price escalation.

Originally published in the ConsensusDocs Construction Law Newsletter (https://www.consensusdocs.org/newsletter-sign-up/) and reprinted with permission. ■