Wire price increase clause?

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Rawls007

Member
I did a bid about a month ago which included about 10,500' of 2/0, 3500' of 1/0, and 3500' of #4. Today I finally get the go ahead for the job, sign a contract, call the supply house to order the material, and they inform me that the wire itself will cost me an extra $4200 from the last time they gave me a price on it a month ago. :mad: Needless to say I almost threw up.

I called the company I'm doing the work for, told them the situation, and asked for a price increase. Of course they told me a bid's a bid, contracts have been signed, and I must complete the project for the agreed amount. Needless to say, they're right but I though it was worth a shot.

I guess this is going to be a hard earned lesson. Does anybody add in clause in their bid proposals to account for situations like this? If so, how do you word it?
 

mdshunk

Senior Member
Location
Right here.
“Where the price of material, equipment, or energy increases significantly during the term of the contract through no fault of the contractor, the contract sum shall be equitably adjusted by change order as provided for in paragraph ___ of this Agreement. A significant price increase means a change in price from the date of the contract execution to the date of performance by an amount
exceeding ___ percent. Such price increases shall be documented by vendor quotes, invoices, catalogs, receipts or other documents of commercial use.”

“Where the delivery of materials, including but not limited to [insert specific materials made with copper], is delayed through no fault of the contractor, the owner shall not hold the contractor liable for costs associated with such delay.”
 

mdshunk

Senior Member
Location
Right here.
"Owner understands and agrees that a material allowance amount has been estimated and included to cover the entire expense of the {SPECIFY MATERIAL(s)} for this job. This amount is included to set the price on those materials in anticipation of potential material price increases beyond {CONTRACTOR}'s control. The MATERIAL ALLOWANCE AMOUNT IS: ${SPECIFY AMOUNT}.

{CONTRACTOR} will notify owner immediately during the job if material price increases cause the cost of {SPECIFY MATERIAL(s)} for this job to exceed the MATERIAL ALLOWANCE AMOUNT. The Owner may then, at his option, terminate this contract by providing within (#) business days both written notice of termination to the Builder and payment to the Builder for all costs expended in performance of the contract up to the date of termination, plus payment of ${SPECIFY AMOUNT} based on the percent of completion. If Owner fails to terminate this agreement upon notice of the material price increases within (#) business days, {CONTRACTOR} may proceed to purchase the {SPECIFY MATERIAL(s)} at the increased price, and the Owner shall be required to pay the increased cost as provided herein.

Final review of all specified material invoices will be reviewed by Owner and {CONTRACTOR} within 24 hours of job completion and the final price for the {SPECIFY MATERIAL(s)} will be calculated, along with (%) for administrative fees, and will paid to {CONTRACTOR} by Owner in addition to the final payment for the job.
"
 

mdshunk

Senior Member
Location
Right here.
hardworkingstiff said:
I'm not so fancy.

Due to the fluctuating price of copper, our price is only good for 14 days from the above date.
That's cool, but what if you're on the job for a year, and you won't even think about buying much wire for that job until months from now?
 

hardworkingstiff

Senior Member
Location
Wilmington, NC
mdshunk said:
That's cool, but what if you're on the job for a year, and you won't even think about buying much wire for that job until months from now?

My big jobs are marinas and I learned a while ago that I buy all the wire immediately, put a storage container on site, ship the wire to the site and invoice for it. I get paid and I make sure to keep insurance on the contents of the container. I have some wire on a job that is approaching 3 years. Customer (or me) saved a bundle by doing it my way. Of course you lose the chance to pick up a couple of bucks if copper drops.
 

brantmacga

Señor Member
Location
Georgia
Occupation
Former Child
mdshunk said:
That's cool, but what if you're on the job for a year, and you won't even think about buying much wire for that job until months from now?

We had a local EC get a job wiring two new schools in a neighboring county. They purchased all of the wire 6 months before starting the job: $1.3 million worth. Our local hughes supply was going out of business at the time (also where they purchased the wire) and leased out their warehouse to store it. I don't know the details of their agreement, but the branch manager said the company purchased a separate insurance policy to cover it, just in case. It was wall-to-wall ceiling-to-floor copper.
 

teco

Senior Member
Location
Mass north shore
The charge for the materials portion of this estimate is subject to change at anytime. Short and sweet. This is on every estimate I give.

Mark
 

iwire

Moderator
Staff member
Location
Massachusetts
teco said:
The charge for the materials portion of this estimate is subject to change at anytime.

Why would a customer sign such an open ended agreement?

Both Marc and Lou's have defined terms. :smile:
 

teco

Senior Member
Location
Mass north shore
I have been including this or something like it for 19 years. I do not do any residential work so I'm guessing it wouldn't go over with home owners at all but I never had a problem explaining to my commercial or industrial customers that some prices(like copper) change everyday and this is why its in the estimate. The suppliers won't take the loss.

Mark
 

dbuckley

Senior Member
You guys need to get yourself organised as an industry.

In the UK, there is an industry body, BEAMA, which has since 1969 been publishing the CPA, the Contract Price Adjustment, which every month publishes an index of how much electrical stuff has gone up.

All contracts are subject to BEAMA adjustment, a quick google came up with this typical example:

17. Contract Price Adjustment.

Should variation in cost, either by rise or fall, occur during the contract period, then the Contract Price shall be adjusted to provided for these variations, any such adjustment being based on the BEAMA CPA Clause and Formulation for Electricity Machinery and Electronic equipment.

When I say "all contracts" its not the law or anything, but every EC requires it; you couldn't find a contractor willing to do a decent sized job (ie one that takes more than a day or two) without it.
 

brantmacga

Señor Member
Location
Georgia
Occupation
Former Child
dbuckley said:
You guys need to get yourself organised as an industry.

Fat chance. I would imagine the big boys have it together somewhat, but the only place I've seen small fish school together is in the ocean.
 

iwire

Moderator
Staff member
Location
Massachusetts
teco said:
I never had a problem explaining to my commercial or industrial customers that some prices(like copper) change everyday and this is why its in the estimate.

Mark I can understand and agree that prices change, my only thought was your wording is very open ended in your favor.

What it really says is how much confidence your customers have in you to treat them fairly and not take advantage of them. :smile:
 

ed downey

Senior Member
Location
Missouri
Working for a large general contractor there are many contractors that put the statement that due to material increases we are not liable (in some form). The only problem is that quotation is never included in the actual contract. As a general contractor and representing an owner we cannot be liable for future increases (unless it is a corps of engineer job).

If a contractor wants the job they will figure out how to purchase the wire and light fixtures and store them as part of their bid.

-Ed
 

teco

Senior Member
Location
Mass north shore
iwire said:
Mark I can understand and agree that prices change, my only thought was your wording is very open ended in your favor.

What it really says is how much confidence your customers have in you to treat them fairly and not take advantage of them. :smile:

Bob(iwire)
You hit the nail on the head. I've had most of my customers for years. I didn't want to say that (sounds like bragging) so you did for me.

Thanx
Mark
 

brantmacga

Señor Member
Location
Georgia
Occupation
Former Child
ed downey said:
If a contractor wants the job they will figure out how to purchase the wire and light fixtures and store them as part of their bid.

-Ed

That is not the issue. What happens is when we turn in a bid and the GC waits two weeks to make a decision, the price of copper could have doubled by then (not likely of course). EC's are just looking for protection from this. No one is going to purchase all the wire for a job they don't yet have. Its the slow moving general contractor that is causing the problems here. :wink:
 

Rewire

Senior Member
brantmacga said:
That is not the issue. What happens is when we turn in a bid and the GC waits two weeks to make a decision, the price of copper could have doubled by then (not likely of course). EC's are just looking for protection from this. No one is going to purchase all the wire for a job they don't yet have. Its the slow moving general contractor that is causing the problems here. :wink:
I only hold a bid for two weeks I have a deal with my supply house they will hold a wire quote for me for two weeks.
 
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