The Contractor and Client are currently agreeing the Target Cost within an ECI period (using X22) for an NEC4 Opt C scheme.
There will likely be a c. 9 month gap between agreement of the Target Cost and the Start Date. The Client has X1 included, although the proportions currently listed under X1 are not relevant to some of the Subcontract packages.
Question - Is the Contractor entitled to price in inflation within the Target Cost to account for the Sub-con prices increasing from agreement of the Target Cost to the commencement of the Sub-con works (as most of the Sub-con prices are only fixed for 30 days from receipt of quote), or will this be dealt with under X1? If they will be dealt with under X1, what is the mechanism to do so?
All X1 will do is inflate the Target in line with the proportions / indices listed therein; its a pretty straightforward bit of maths as part of each assessment of the amount due.
You say that this will only cover some circumstances, meaning there are other circumstances where the Contractor will not be covered for inflation. As a result that non-X1’d amount is a risk carried by the Contractor, and you’d expect them to price for that.
Whether they are entitled to include that in their Prices for Stage Two is a function of the Pricing Information in your contract. If that says ‘no inflation’ then it would be deemed covered in Fee. If not, then I would suggest it is a reasonable risk to price and include. Whether the client team accept that or not is a separate question.
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