Ask an Attorney: Can I Use a Price Escalation Clause In My Construction Contract?
With the impact of COVID-19 wreaking havoc in the supply and demand chain, construction materials have skyrocketed in price, and in some cases, have caused painfully long lead-times for materials. Contractors skilled and experienced in quoting a fixed fee or a guaranteed maximum price (GMP) are leery giving such quotes without some cushion to absorb the risk in these steep price increases. As a result, many contractors have been scrambling to put price escalation clauses in their standard construction contracts. These price escalation clauses give the contractors the cushion they need to move forward with a project.
