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SHIFT THE RISK AND BURDEN OF ESCALATING MATERIAL COST TO OWNERS

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CONTRACTORS SHIFT THE RISK AND BURDEN OF ESCALATING MATERIAL COST TO OWNERS

The cost of work involving installation of materials made from concrete, steel, drywall, flooring, etc., fluctuates. Material costs can creep up slowly or increase rapidly. Rapid escalation of construction materials can make it difficult for contractors to provide accurate and competitive lump sum/fixed priced bids.

Contractors sometimes have a built-in cushion within its bids for potential increases in material costs. However, predicting the fluctuation of material costs isn’t easy and your bid may not be competitive with other bidders.

Obviously, the contractor’s profits decrease if the cost of the materials go up between the time the lump sum contract is signed and the time the work commences [which can sometimes be many months later].

Unless you SHIFT THE RISK AND BURDEN OF MATERIAL ESCALATION COSTS TO THE OWNER

Your contract agreements must have a provision shifting the risk and burden of material escalat…