Sample Construction Contract Escalation Clause

When working on a construction project, it is essential to have a contract in place that outlines the scope of work, timelines, and payment terms. However, unforeseen circumstances can arise, leading to additional costs and delays in the project`s completion. This is where the escalation clause comes into play.

An escalation clause is an addendum to a contract that allows for adjustments to the contract price or timeline based on specific factors like material cost increases or unexpected work requirements. This clause protects both the contractor and the owner from undue financial burdens caused by unforeseen events.

Here is a sample construction contract escalation clause:

“In the event that the cost of materials and labor required to complete the work increases by more than 5% above the original contract price, or if there are any changes in project scope or timelines that cause additional expenses to be incurred, the contractor reserves the right to adjust the contract price and timeline accordingly.

The contractor will provide written notice to the owner detailing the nature of the changes and the reason for the adjustment. The owner shall have the right to accept or reject the proposed changes within 10 business days of receipt of the notice. If the owner rejects the proposed changes, the contractor may terminate the contract.”

This clause provides a clear framework for how changes to the project`s scope or costs will be handled. It also ensures that the contractor and the owner have an open line of communication about any changes before they become major issues.

In conclusion, having an escalation clause in your construction contract can help protect both the contractor and the owner from unexpected expenses and delays. It is essential to work with a knowledgeable copy editor with experience in SEO to ensure your contract is thorough and effective.

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