Fluctuations

Like many other sectors, the construction industry's growth resurgence is being increasingly impacted by volatile and unpredictable supply chains for materials and labour. Clients and contractors are seeking both to protect their position and, increasingly, agree to share the risk that current market conditions pose, by implementing fluctuations provisions. Used incorrectly, such clauses may have unintended consequences and this article explores some of the issues they present and potential solutions or compromises that our clients may want to consider.

A primary concern for clients at the outset of a project is cost certainty and why a ‘fixed price' contract, such as the JCT D&B contract, is frequently selected (and why many bespoke development agreements follow its treatment and control of contractor expenditure). A fixed price contract specifies a contract sum that accounts for the amount the contractor has deemed will cover the labour and materials necessary to