Guidance on Managing Price Inflation released by Build UK

Guidance on Managing Price Inflation released by Build UK

It has been reported that there has been an increase of inflation on products and materials of 23% this year, with further increases expected. Build UK has released a helpful guide with many suggestions on how to handle a volatile, rising-inflation economy.

The guidance includes advice on fluctuation clauses, negotiating new and existing contracts to add new and relevant inflation clauses, and how to mitigate inflation’s impact on projects.

Paul Cossell, the Build UK Chair, wrote an open letter to the construction industry as an accompaniment to the Guidance: ?

“With businesses across the industry under pressure, we all need to play our part. We often talk about the better industry we want to see, where risk is allocated fairly and projects are delivered more efficiently. How each of us responds to the current challenges will determine how quickly we can realise this vision.

“We learned the value of collaboration during the pandemic and showed that we perform better as an industry when we work together. Where businesses, programmes or projects are struggling due to materials shortages and price inflation, we need to discuss the issues openly and find creative and innovative ways to mitigate these risks in the interests of our clients and the supply chain.”

The guidance mostly gives advice on amending or negotiating on NEC or JCT contracts as these are the most common contracts used in UK construction.

Some of the advice provided on practical and commercial steps parties can take to mitigate inflation include:

·???????Early planning, design, and sourcing and early ordering of and payment for materials

·???????Carrying out regular financial checks on companies within the supply chain

·???????Keeping detailed written records to assist with variation, delay, or loss claims.

·???????Also, Applications for payment being on time.

?More advice can be found at https://www.builduk.org/priceinflationguidance

Hanscomb can provide advice from commercial and quantum experts to assist you in overcoming the current issues.