ConsensusDocs recently posted a free webinar on Construction Price Escalation that helps owners, general contractors, and trade contractors alike navigate the unprecedented price spikes and supply chain disruptions wreaking havoc on the industry. You can access the webinar here, as well as other valuable resources available on the ConsensusDocs Price Escalation Resource Center that includes links to sample language provided in the ConsensusDocs 200.1 Price Escalation Amendment.
One of the many takeaways from the speakers Adrian Bastianelli from Peckar & Abramson and Brian Perlberg of ConsensusDocs was to consider the ramifications of using a Cost of Work Agreement with or without a Guaranteed Maximum Price (GMP) versus a lump sum agreement, also known as a firm-fixed-price contract. A cost of the work agreement like the ConsensusDocs 235 places the cost of price escalation burden onto the owner. However, a cost of the work agreement with a Guaranteed Maximum Price (GMP) like the ConsensusDocs 230 limits an owner’s exposure for cost overruns only to the amount of the GMP (provided the GMP doesn’t increase for a justified change order). These contract document agreements contrast with a stipulated lump sum contract like the ConsensusDocs 200 or agreements published by the American Institute of Architects that utilize the AIA A201 terms and condition contract document, which places the burden of price increases onto the General Contractor. Also, contract prices can increase with a price escalation amendment like the ConsensusDocs 200.1. Price escalation clauses adjust prices for selected construction materials which are tied to objective price indices after baseline prices are set.
With so much interest as well as confusion on how to handle construction price escalations and supply chain shortages in construction contract documents, this popular webinar will draw lots of interest in those in the design and construction industry seeking solutions.