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Hi,

I started my home construction almost a year ago with a item-wise contract. The prices for several items (cement, steel, sand, etc.) have gone up during this period. The contract clearly says no price escalation will be considered for one year. I like to know what is the on-going trend in the market to handle settlement with the contractor on price escalation. Will you consider paying up a percentage of price escalation (as a good will) or none at all ?

Thanks.

It depends on how your contract is executed. usually its not based on the time frame say 6 months or 1 year as the prices are very volatile in the recent years. usually contractor will put a reference price limits for the materials say for Cement, Steel, Bricks...etc based on the prices at that time. He also mentions if there is an escaltion of material prices upto 3% or sometimes 5%, he will absorb it and will not pass it on to you. only if the prices goes above those percentage, he will charge you the differential amount.

Base price for all essential materials are noted in the contract. The contract says no escalation allowed for 12 months. Only after 12 months, if the price is above 3% then escalation will be considered for the difference in amount. Does it sound reasonable & a common practice ?