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How to learn Price Escalation

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14y ago

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What is the difference between cost escalation and price adjustment in construction contract?

In my opinion cost escalation refers to a scenario in which cost enhancements of the specified items in the specified formula are agreed to be given to the contractor with time over the base line agreed therein. The price adjustment on the other hand refers to not only escalation or enhanced rates but variation in the negative side also. As in construction contract, the variation in rates may be on either side, it is appropriate to use the word of price adjustment rather than price escalation. Regards, Liaqat Hayat


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