Fluctuations in construction contracts


Published by a UUÂãÁÄÖ±²¥ Construction expert
Practice notes
Brexit

Fluctuations in construction contracts


Published by a UUÂãÁÄÖ±²¥ Construction expert

Practice notes
Brexit
imgtext

What are fluctuations?

Fluctuations provisions are clauses in construction contracts that allow the contract sum to be adjusted to take account of changes to the price of labour, materials and other costs throughout a construction project.

By way of example, if a contractor tenders on the basis of prices current at the time of tender, and then inflation results in the cost of procuring the works increasing during the project, the contractor bears that cost. Where there are no fluctuations provisions in the building contract the contractor is deemed therefore to have taken account of inflation and the risk of any inflationary increases in its pricing. On the other hand, where there is no fluctuations clause, if prices go down, a contractor could benefit from the reduced costs.

Where fluctuations clauses are included in a construction contract, the contractor could be entitled to be reimbursed some or all of any additional costs caused by rising prices. Calculating the increased cost may be achieved by using an index based formula, or by using a published list of market prices for

Powered by Lexis+®
Jurisdiction(s):
United Kingdom
Key definition:
Fluctuations definition
What does Fluctuations mean?

Some standard form contracts contain provisions which entitle the contractor to an addition to the contract sum to take into account of differences in the cost of labour and material between the tender date and the time when the work is actually done. These provisions must be excluded if the employer and contractor wish to agree a fixed price.

Read more

Popular documents

Defective Premises Act—work in relation to dwellings

Defective Premises Act—work in relation to dwellingsUnder the Defective Premises Act 1972 (DPA 1972), a person who takes on work:•for, or in connection with, the provision of a dwelling (DPA 1972, s 1(1)), or•in relation to any part of a ‘relevant building’, which is a building containing one or

What is practical completion?

What is practical completion?Practical completion marks the end of the construction period of a project, when the works are 'finished' and the employer can occupy and/or use them. Practical completion also typically marks the start of the defects liability period/maintenance period.As explained

Liquidated damages in construction contracts

Liquidated damages in construction contractsThis Practice Note explains what liquidated and ascertained damages (LADs/LDs) are and their purpose in a building contract. It considers the difference between liquidated damages and general (or unliquidated) damages and looks at the enforceability of

Escrow accounts and escrow agreements

Escrow accounts and escrow agreementsThis Practice Note examines why parties involved in a construction project may enter into an escrow agreement (or escrow deed) to set up an escrow account. It looks at the benefits of paying funds into escrow, how an escrow account operates and the provisions