With costs spiralling in all areas at the moment, Built Intelligence have teamed up with Construction Law expert, Mike Tiplady of Wellesley Construction Services. The aim of this webinar is to consider how the construction industry is being affected by cost inflation, and how the major forms of contract JCT and NEC can allow for recovery of inflationary costs. @Mike_Tiplady
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What is the situation with inflation on variations? Still fixed rates? JCT. @Mike_Tiplady
Can we not use the risk register? @Mike_Tiplady
the JCT Formula rules for option C does not mention BCIS? and is a very complex set of rules is the option C the correct route for market prices for say just focusing on materials? would option B not be more appropriate? @Mike_Tiplady
What is the long term expected rate of inflation? is it still going to go up? any levelling off? @Mike_Tiplady
Currently in a live NEC 3 Option C contract – it includes X2. Contractor is citing recent changes in the law relating to the Ukraine War. The majority of these legislative changes are very specific to aspects of the political situation (relating to trading in arms, no Russian planes in UK airspace etc). More recent legislative change appears to draw in restrictions on the purchase of a range of materials from Russia including iron & steel. What would be the speakers’ view on such changes which on the surface appear more tangibly to have the potential to impact Defined Costs… @Mike_Tiplady
Liz. I think that the use of the BCIS formulas based on actual costs as published is the easiest and fairest option. Full details for the BCIS can be found on their website: www.bcis.co.uk
Hard to answer this without a crystal ball. It seems to me that the drivers for inflation are driven by supply chain issues, labour shortages, rising energy costs. Not simple things to fix.
Any changes in law have to be related to the actual costs of carrying out the Works and not general changes in law. Option X2 is unlikely to give relief to the Contractor unless he can demonstrate an actual cost in carrying out the Works.
Which contract’s mechanisms are more flexible in managing inflation: JCT or NEC? @Mike_Tiplady
Would a CE for inflation say under an Option C cover the increase cost to employ People as a result of the additional Employers NIC levy introduced via a change in law? @Mike_Tiplady
A good question in the current economic climate. My view is that the NEC option X1 offers the maximum flexibility as it allows for the use of different indices across different work packages.
Changes in law under an NEC Contract that lead to increases in the Defined Cost would be best dealt with under Option X2.