Ok, as a design-builder we all know that the supply chain delays and material shortages are for real. Well, you guessed it, the price of the steel package went through the roof on our largest GMP project. We asked for a CO based on force majeure but the owner ghosted us.
Apparently, there is no specific reference to price escalations in the FM clause. Is this legit or were we caught snoozing during the contract negotiation? Are we going to get stuck with eating 25% increase in our steel package unless we can win some sort of claim? And, what gives with the one-sided escalation?
Caught Napping?
Dear Caught Napping,
Wake up ! We state again, once more with feeling, WORDS MATTER! The current environment mandates that the project parties put price escalations on the table. While things have leveled off somewhat, surprises of any kind are very bad for any project. You can’t do much about it once the project commences. For future projects, give them a price but make escalation based on reasonable protocol a specific subject. Agree not to no mark-up. Include the owner in the detail of the specific material in question. Work on acceptable alternatives, and build in a collaboration clause on this matter. Sure, listing price escalation a force majeure will help but a more elaborate, team exercise is better and makes it much more likely for you to to avoid conflict with your owner, YouDig?
