CONTRACTS
Facing the increase Can a fixed price contract be renegotiated?
C
onstruction cost inflation in 2021/2022 is unprecedented, and after decades of price stability in the supply of materials, labour and plant, construction costs have skyrocketed together with shortages of all resources. Construction cost increases and shortages bring two problems; firstly, trading losses as contracts become underpriced, and secondly, costly
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delays to the works. That inevitably leads to demands for more money, which might be ignored, and walkouts by contractors, which is repudiatory breach of contract, and it follows a liability to crippling damages. Most construction contracts are fixed price ones with no provision for price increases; indeed standard forms have optional clauses such as the JCT fluctuations clause, which is an option only and rarely used.
How can a claim be made when faced with a strict fixed price commitment to a contract that is no longer tenable on price? Each case will have different circumstances and merits, an analysis of the case will hopefully reveal a strategy. That outcome might be a claim for loss and expense if the payer is culpable for delays or there may be an opportunity to recover losses in the valuation of variations. There might also be a case for price
