In a time of volatile pricing and stressed supply chains, there is increasing uncertainty whether a subcontractor or supplier will be able to timely satisfy its scope of work. If there is an inability to hold the original price and schedule duration, the entire project will suffer. Open communication of these risks to all members of the construction team from day one is key.
Some of the recommended ways to minimize this risk include:
- Prequalify subcontractors before inviting bids.
- Verify the duration of subcontractor pricing in bid proposals.
- Bond subcontractors with 100% performance and payment bonds.
- Stockpile key materials.
- Consider alternative materials and procurement.
- Recognize that the lowest price may not always be the best price.
- Utilize a Price Escalation Clause like the ConsensusDocs Amendment 200.1.
If you can expend additional efforts to anticipate and manage cost and schedule impacts, you can reduce the risk of significant price escalation or expensive delays during these uncertain times.