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Weathering the materials shortage storm: Is your contract watertight?

Every day we are seeing headlines about one product or another being hit by supply shortages due to a whole host of reasons. Whether it's the record demand for new homes, a home improvement market the likes of which we've never seen before or supply side issues such as the 'pingdemic', the uncertainties for many contractors, sub-contractors and clients are proving very difficult to manage.

As a result, there is a great deal of volatility in the construction sector on the whole, and in turbulent times we always see numerous issues arising in relation to construction contracts.

This volatility was something that the Construction Leadership Council (CLC) flagged up recently when their co-chair Andy Mitchell said:

"This volatility is likely to be something we must live with for a while to come and could have a significant impact on the timeframes and delivery costs of many projects."

The CLC rightly point out that contractors and sub-contractors could be exposed to commercial risk because their contracts do not account for the current material price and delivery volatility. So, in the face of a rising number of legal challenges, they urge the use of the JCT and the NEC 4 Secondary X1, which are two different forms of standard construction contracts that include provisions for managing volatility. Both have approaches to managing the risk attached to obligations of time, cost, and quality.

According to the CLC these types of contract "are ideally suited to providing a means for managing the volatile period we are now entering and, therefore, CLC strongly urge those responsible for developing, agreeing and managing contracts, existing and new, to consider adopting these provisions in their contract."

Protecting your interests in a volatile market

As an industry we are generally not used to this level of volatility and adding 'volatility clauses' into contracts has not been necessary given the relatively stable prices and availability we've had over recent decades.

Now, however, we need to think differently. If you are not already checking your contracts to ensure they contain provisions for material supply issues, it is important to start doing so. Investing a bit of time and effort before you sign could save you a lot of stress longer term and lower the risk of financial loss.

This is something Quantum CPM (Cost & Project Management) can help with. We offer a Contract Vetting service to contractors and sub-contractors which will help you bust the jargon and flag up any areas within a contract that you should be wary of. We will also help you to ensure contracts can be administered properly so you can get paid, have you account agreed, and make a profit.

Contract Vetting is part of our Bundle of Services that we provide to make any construction project a success. These professional services range from the measurement and valuation of construction work, to administering contractual terms, appraisal and reporting of the progress of works for application for payment.

Book a free initial consultation

Accessing Quantum CPM's Contract Vetting service is easy with a free initial consultation and no obligation. We provide you with a fixed price quote to vet your contracts at any time, so you can avoid any unexpected costs both before and after the submission of tender.

To arrange a free consultation, please call Quantum CPM on 0161 974 6655 or email .