Navigating The Escalation Storm

The business of construction is a roller coaster ride at the best of times. But few things challenge the industry more than the fierce cost escalation that construction is currently experiencing. Unfortunately, with escalation someone in the process often must lose.

Escalation is uniquely challenging because it breaks the bonds and expectations that the industry depends on. Owners rely completely on the price certainty that contractors and suppliers are usually able to deliver. Without that certainty, the entire construction process breaks down. Escalation however cannot simply be managed by passing the financial risk onto contractors and suppliers with tighter contract terms. It also cannot simply be passed on to the owner - the owner has usually not planned for it and may have no capacity to absorb it.