Close Menu
AGC NewsAGC News
  • Home
  • News
    • Advocacy
    • Economics
    • Energy & Environment
    • Infrastructure
    • Building
    • Procurement
    • Labor & HR
    • Safety & Health
    • Technology
    • Workforce Development
  • AGC Videos
  • Constructor Magazine
    • Digital Publications
    • Online Exclusives
    • Sponsored Content
  • ConstructorCast
  • News Releases
Latest News

AGC Tech Conference: Measuring A.I.’s Impact

May 30, 2025

Trump Administration Pauses Enforcement on Portions of the Mental Health Parity Rules

May 29, 2025

AGC Supports the Rollback of Beneficial Reporting Requirements under the Corporate Transparency Act; Urges President Trump to go further.

May 29, 2025
Facebook X (Twitter) Instagram
Facebook X (Twitter) Instagram
AGC NewsAGC News
  • Home
  • News
    • Advocacy
    • Economics
    • Energy & Environment
    • Infrastructure
    • Building
    • Procurement
    • Labor & HR
    • Safety & Health
    • Technology
    • Workforce Development
  • AGC Videos
  • Constructor Magazine
    • Digital Publications
    • Online Exclusives
    • Sponsored Content
  • ConstructorCast
  • News Releases
AGC NEWSLETTERS
AGC NewsAGC News
Home » Price Escalation Continues to be the Top Issue in Construction Contracts but Some Success Stories Can Now be Shared
Construction Law

Price Escalation Continues to be the Top Issue in Construction Contracts but Some Success Stories Can Now be Shared

October 10, 2022Updated:December 12, 2023No Comments3 Mins Read
Facebook Twitter LinkedIn Email
Economic Release: Producer Price Index Data
Share
Facebook Twitter LinkedIn Email

Price escalation and supply chain disruptions continue to register as the number one issue in construction contracts today. The absence of a price escalation clause is considered a “killer clause” for many general contractors working on private vertical construction. Public owners are taking notice as well.

Now there are some success stories of public owners addressing price escalation in their contracts and through contract administration. The St. Louis Water District (“District”) looked at the ConsensusDocs 200.1 Price Escalation Clause after dialoguing with the AGC of Missouri and AGC National. Consequently, the District included price escalation language in a recent bid for a $160 million project. It will also consider including such language in its future work, which is expected to amount to over $500 million of construction. Price escalation language helps mitigate the tremendous risk that General Contractors face today.

Interestingly, the District’s price escalation clause requires general contractors to decide if they want to take on the risk of de-escalation along with the benefit of potential increases for price escalation. Some general contractors may out opt-out of such a price escalation clause. These general contractors see the downside risk as too great because they face resistance from suppliers unwilling to give back money if an index indicates de-escalation. There are also concerns that objective indexes for materials costs might not accurately reflect prices actually experienced on a particular project.

Texas Department of Transportation (TxDOT), in an April 2022 internal memo, recognized there have been availability issues and increased lead times for items as well as “significant increases (over 100 percent in some cases) in some material prices.” The memo lays out eight ways TxDOT strives to be a good owner in these challenging times. Some highlighted strategies include:

  1. Pay as soon as possible for materials.
  2. Allow expanded use of purchasing and storing materials beyond just long lead items under its “delayed start authority.”
  3. Pay higher prices when the timing for purchasing materials is delayed by the owner.
  4. Pay the higher price when the quantity of material needed is increased.
  5. Allow for substitutions.
  6. Consider deletions to avoid long lead times or more expensive materials.
  7. Consider giving additional time.
  8. Refer matters to the TxDOT Administrator (if all else fails).

These examples of price escalation “success stories,” as well as the latest price escalation and supply chain disruption trends, were discussed at the Associated General Contractors of America (AGC) recent National Chapter Leadership Conference in Washington, D.C. by ConsensusDocs Coalitions Executive Director Brian Perlberg, along with AGC’s Chief Economist Ken Simonson.

Additional Resources

ConsensusDocs Price Escalation Resource Center

TxDOT price escalation memo

Building Federal/Heavy Highway Infrastructure Utility
Share. Facebook Twitter LinkedIn Email

Related News

AGC Supports the Rollback of Beneficial Reporting Requirements under the Corporate Transparency Act; Urges President Trump to go further.

May 29, 2025

SCOTUS Narrows the Scope of Environmental Review

May 29, 2025

Construction Jobs Increase In 184 Metro Areas Between April 2024 And April 2025

May 28, 2025

DOD and GSA Must Follow PLA Mandate for Now, Court Rules

May 27, 2025
Add A Comment
Leave A Reply Cancel Reply

Latest News

AGC Tech Conference: Measuring A.I.’s Impact

May 30, 2025

Trump Administration Pauses Enforcement on Portions of the Mental Health Parity Rules

May 29, 2025

AGC Supports the Rollback of Beneficial Reporting Requirements under the Corporate Transparency Act; Urges President Trump to go further.

May 29, 2025

Your source for AGC news. Find us on social media to learn more about the Associated General Contractors of America.

Connect with us:

Facebook X (Twitter) Instagram YouTube LinkedIn
© 2025 Associated General Contractors of America.
  • Home
  • AGC.org
  • Get In Touch
  • Convention
  • Notice of Permission to Use
  • Privacy Policy
  • Antitrust Policy

Type above and press Enter to search. Press Esc to cancel.