Construction contractors and subcontractors are struggling with volatile price increases and the availability of materials. Construction stakeholders are looking for ways to fairly adjust time and price during these uncertain times.
ConsensusDOCS is a group of dozens of construction trade associations that have agreed upon equitable contract documents. ConsensusDOCS 200.1 is an Amendment form that will modify a Lump Sum/Fixed Price Contract so that if industry-wide economic conditions materially impact price, availability, and delivery time frames, there might be an equitable adjustment in the Contract Price.
Under the ConsensusDOCS 200.1, the parties agree in advance on a method to adjust the Contract Price – under certain circumstances – with an x% maximum limit on increases (or decreases) of the Contract Price. The parties may limit these adjustments to certain types of materials (i.e., fuel, steel), or might elect to have it apply to all materials. There also is a provision to tie the adjustment to an agreed-upon objective market index.
There are no adjustments for time or price impacts caused by the Contractor, or its subcontractors or suppliers. Both the Owner and the Contractor have an obligation to mitigate the effect of such impacts. The Contractor shall receive no overhead and profit on any equitable adjustment.
Parties to the construction process who are struggling with allocating the risk associated with unpredictable inflation and unavailability of materials may want to consider utilizing this form or a similar clause to help deal with these risks.