What is the purpose of a price escalation clause in a construction contract?
Correct answer: A. To adjust the contract price for specified cost changes
- A. To adjust the contract price for specified cost changes
- B. To increase the contractor's profit by a fixed percentage
- C. To transfer all design responsibility to the contractor
- D. To replace measurement of work with visual inspection
Explanation
A price escalation clause permits specified contract rates or prices to be adjusted when defined input costs, such as labour or materials, change. Its operation depends on the formula, base date, and conditions stated in the contract.
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Construction management covers planning, scheduling, resource control, contracts, procurement, site organisation, safety, quality assurance and project documentation. Estimation includes quantity take-off, rate analysis, bill preparation, valuation and cost control, with attention to the difference between direct and indirect costs and between an estimate, a tender and a final account.
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