The question
We’re building a timber-framed residential project in Sheffield and our suppliers won’t guarantee prices for more than a few days at a time, but the client wants a tender price. Contractually and commercially, what options are open to us to help us manage the constantly changing prices, and what are the risks?
The answer
There are a number of options available in this scenario. The best option for your project will depend on how you and your client feel about risk and the likelihood of a changing contract sum. It sounds as though your client is keen to have a fixed contract price for the tender. However, one option available is to agree with your client for your contract to include a fluctuation provision.
Fluctuation provisions are clauses in construction contracts. They allow adjustment of the contract sum to account for changes in the cost of labour, materials and associated costs. Fluctuation provisions aim to mitigate the risk of changes to the cost of these items during the construction contract.
This article was written by Helen Johnson a partner at CMS UK. Click here to read Helen’s full response. Should you need help with any of the issues raised in this article, please don’t hesitate to get in contact with us today.