Following successful lobbying by the CICV Forum in Scotland (of which FIS is an active member), the Scottish Government have issued a new Construction Policy Note (CPN) that sets out measures for contracting authorities to manage and mitigate market pressures affecting the availability and affordability of construction sector resources.
Amongst the key recommendations in the note that call for fairness, a focus on conflict avoidance is the recommendation to adopt fluctuations clauses, specifically:
“Contracting authorities may wish to consider writing formal price fluctuation clauses into tender documents. This should reassure bidders that they will not be exposed to large and unpredictable movements in the prime cost of materials during the course of the contract. It should reduce the pricing cover included in bids for unquantifiable inflation risk thereby bringing them in scope of a well-estimated client budget. It will also return prime cost decreases to the client, should such occur during the project.”
Commenting on the note FIS CEO, Iain McIlwee said, “This is a real triumph for the CICV and shows what can be achieved when the industry works together and provides a clear message to government. It simply isn’t reasonable to expect the supply chain to absorb ever more risk on the thin margins that construction now offers and we are grateful to the Scottish Government for stepping in. This note should be welcomed by construction businesses across Scotland”.
The full policy note Resources for construction projects: CPN 3/2021 can be read here.