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Saturday, September 13, 2025

ESCALATION OF COST CLAUSE

 ESCALATION OF COST CLAUSE


You know why contracts awarded by Government or Government organisations are never completed in the time prescribed for completion. 

The contracts would have a built in clause, 'Escalation of Cost'.

According to this clause the contract  agreement would affirm  that in case the work could not be completed in time due to causes or reasons beyond the control of the contractor, he would be paid 10% or 20% or more as agreed upon taking into consideration the escalation in costs that may arise with the passage of time

Obviously no work would meet the deadline. 

The excess amount thus released would meet other expenses of the contractor that could not be a part of the contract

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