Escalation costs under NEC3 Option C

If option X1 Price Adjustment for inflation is not a selected secondary option clause, is the Contractor entitled to inflationary adjustments as part of their Compensation Events?

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In short, the general answer is ‘No’ as there are no other provisions in the contract to allow for inflation. However, you mention for compensation events !

Under clause 63.1, the cost of a compensation event is assessed as the effect on Defined Cost. Except for rates stated in the Contract Data, these costs would be ‘live’ costs. By ‘live’, I mean the true costs to be encountered at the time of the compensation event, not those at the time of signing the contract. Note this only applies to the changed costs and does not provide an excuse to inflation link costs and prices which were in the original tender.

In addition to Jon’s point, where the impact of the event is to delay other works it would be appropriate to consider whether there has been a change in the cost of those works as a result of the delay. These secondary types of impact are, in my view, caught by the very wide description in clause 63.1 which says the changes to the Prices are the forecast of Defined Cost of the work not yet done. There is no limit there to the compensation event so you should be taking a holistic view on the impact of the event and looking at changes from that point on. Option X1 allows for similar movement without the need for a compensation event.