Change of remuneration in public construction contracts -

Surging prices for construction materials, an inflation rate that is highest in years, and spiralling operating costs are a major headache for construction companies at the moment. The problem is particularly acute when it comes to putting together project cost estimates, as it has become all but impossible to predict with any precision future prices of major cost components and, consequently, the overall project cost. This article looks at the issue of change of remuneration in construction contracts in Poland, focusing in particular on construction works contracts awarded under the public procurement regime. There is no doubt that the contract valorisation provisions of the Public Procurement Act have an immense impact on the entire construction market. The objective of the mechanism is to reduce the high risk of cost escalation borne by firms that bid for, and receive, construction works contracts from public entities, by permitting modifications to the overall contract price to reflect cost increases. Therefore, understanding its practical aspects can help economic operators to manage their risks better and execute projects more efficiently.

Originally published in PMR Construction Insight: Poland - February 3, 2022.