Inflation of prices after contract award

[Snatch]

I am working on a housing development project, as part of the contractor's team. After signing the contract the cost of cement has increased by approximately 25% . The contract states that there will be "no revision in prices". The option we are thinking about is to claim under force majuere "unforseen circumstances", to cover this increase. I know this is a weak case from previous projects.
Has anyone dealt with this type of case previously?. Are there any other methods that can be used to claim for increased prices.

Thanks
Snatch

 

[SlideRuleEra]

Before going into the "legal" part of the contract, you could try to negotiate with the Engineer AND the Owner (all three of your representatives in the same room, at the same time - no lawyers).

Bring with you honest, written records showing the cost basis for your bid and proof of what costs are now. You need NUMBERS, not opinions, not estimates. Ask only for the extra, documented cost of materials (no added markup for "overhead", etc.)

If this does not work, there is plenty of time for legal claims, or possibly arbitration (depending on the contract). I doubt if the net results (after legal fees, loss of goodwill, etc.) will be worth the trouble.

http://www.SlideRuleEra.net

 

[looksatstars]

Hey Snatch:
where did you get the price of 25% increase in concrete?
Did you check other suppliers in the area?
What is your contract about "extras" , you might be able to work it in with the rest of the job.

 

[GeoPaveTraffic]

SlideRule gave you good advice. As an owner, small city, I can you that we would not even consider an extra claim. However, other owners may.

As a side note, why did the contractor not get a firm price from the concrete supplier for the project when putting the bid together?

 

[cvg]

numerous material suppliers have been sending letters to contractors stating that price increases are being made due to the impacts of Rita and Katrina. I have a letter from Hughes supply (in Denver)indicating that the pcv resin suppliers and even a pipe supplier are pricing at the time of delivery due to Force Majeure. They cite impacts such as plants that have been shut down or are not accepting orders, inability to get shipments from the hurricane damaged areas due to transportation networks being shut down and shortage of trucks due to demands being placed by FEMA due to the rebuilding effort. If your suppliers can provide this type of documentation, then you may be able to use that contract clause to your advantage. Otherwise, try and negotiate as recommended by sliderulera.

 

[Snatch]

Thanks for your input guys.

The contractor is planning set up a concrete batching plant onsite, hence the decision of purchasing cement. There is only one supplier for concrete on island and we are a small order in comparison to other islands in the region.

I do agree with sliderule, but as a safety net i was considering what clauses under the contractor to claim under in the event that the client is not amenable.

Thanks
Snatch