Price Escalation Clause for Contractors and Subcontractors

Below is a price escalation clause for contractors and subcontractors that has been provided by Ben Shapiro who is with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC.  Be advised that the last paragraph would have to be modified for each project.

The Guaranteed Maximum Price is based on the assumption that the cost of materials utilized by Contractor and/or its Subcontractors to perform the Work does not increase or decrease by more than three percent (3%) from the date of this Agreement until the date the materials are purchased. Material cost increases (“MCI’s) exceeding three percent (3%) will be documented by Contractor in the Application for Payment reflecting the MCI, which will automatically increase the Guaranteed Maximum Price by the full amount of the MCI. Material cost decreases (“MCD’s”) exceeding three percent (3%) will be documented by Contractor in the Application for Payment reflecting the MCD, which will automatically increase the Construction contingency account provided by Section 5.2.8 above and reduce the Guaranteed Maximum Price pursuant to the terms and conditions of that Section.

Contractor shall utilize best efforts to enter binding contracts and subcontracts involving material purchases within 120 days of the date this Agreement is fully executed, such period to be extended only for good cause shown, including delays incurred through no fault of Contractor or its Subcontractors as set forth in Section 8.3 of the A201-2017, as modified.

Materials subject to this Section principally include but are not limited to fuel, steel, aluminum, asphalt, lumber, concrete, stainless steel, galvanized steel, PVC piping and gypsum. Documentation of MCI’s and MCD’s will be in the form of correspondence or other communications from actual supplier(s) to Contractor or its Subcontractors, and not in the form of generic market price reports, charts or other indicies.