The construction industry is highly susceptible to inflation - especially when the price of building materials and labour spiral out of control. This can lead to unwanted outcomes such as cost-overruns or an outward cancellation of projects. Given the current inflationary market conditions, it is important to understand how construction contracts handle the risk of inflation/price escalation. The essay highlights common issues that arise from the use of cost fluctuation clauses and explores various contract pricing models for alternative solutions.
SECOND PRIZE SCL(NZ) 2023 Essay Competition winner: Inflation in the construction industry: is a cost fluctuation clause the right solution?