January 25, 2023

The importance of fluctuation provisions explained

News Article

If you are completing a construction project, you may be wondering what fluctuation provisions are and why they are important.

Fluctuation provisions are clauses in construction contracts which can benefit contractors by allowing contract prices to be adjusted.

These adjustments may be made in regard to the changing cost of materials, labour, or transport.

The aim of fluctuation agreements is to transfer the effect of changing prices from contractor to employer.

This is particularly relevant now during the cost-of-living crisis and if you are experiencing difficulties due to rising costs, this could be important in the progress of your project.

There is a growing use of fluctuation provisions in the current climate.

If you have a JCT contract, this will include a Contact Particulars fluctuation provision.

If you have an NEC contract, this will include a Secondary Option X1 option. This means the option needs to be selected when the documents are made.

How can they be beneficial?

The construction industry can be unpredictable, so having this option may help you minimise the impact of external factors on your project.

Prior to starting your project and drawing up contracts, you should conduct a risk assessment in which you assess any difficulties which may present themselves in the duration of the building process.

This will determine whether the implementation of fluctuation provisions should be considered for your project.

If you need advice on your construction contract, fluctuation provisions or related matters, contact us today.