Most contracts these days are let on a fixed price basis, which means that the contractor has to bear the risk of increases in the price of labour, plant and materials which may occur thought the duration of the project. Contractors make allowances for inflation when pricing the job and if inflation is less than estimated, they will make additional profit, but the reverse is also true.
Are there however circumstances where the contractor should be reimbursed for price increases on a fixed price contract?
This case study examines a situation where increases in the prices of materials may be legitimately claimed.
The Institute of Construction Claims Practitioners has a detailed paper on this subject.
To request a copy, please send an email with your contact details to email@example.com with “Contractor’s Entitlement” in the subject line.