Jurisdiction(s):
United Kingdom

Key definition

Fluctuations definition

What does Fluctuations mean? In construction procurement, fluctuations describes contractual mechanisms that adjust the contract sum to reflect changes in the cost of labour, materials and related inputs between the tender or base date and when the work is actually carried out. It is a descriptive term rather than one defined in legislation, and is widely used across standard forms. Typical features include: identification of a base date; the scope of recoverable cost movements (for example labour rates, materials, fuel, taxes or duties); the method of adjustment (proved cost, agreed indices or formulae); and timing and evidential requirements. Fluctuation provisions allocate inflation and...

Fluctuations and price indexation in construction contracts: JCT, NEC and FIDIC options, drafting and delay considerations

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Practice notes

What are Fluctuations?

Fluctuations provisions are terms in construction contracts that permit the Contract sum to be varied to reflect shifts in the cost of labour, materials and other expenses over the course of a project. For example, if a contractor prices a Tender using rates current at the tender date, and inflation then increases the cost of delivering the works during the job, the contractor must absorb that increase. Where a building contract omits fluctuations provisions, the contractor is treated as having allowed for inflation and accepted the risk of price rises within its pricing. By contrast, in the absence of a fluctuations clause, if market prices fall, the contractor might benefit from those savings. If fluctuations clauses are included, the contractor may be entitled to reimbursement of some or all additional Costs caused by rising prices. The uplift can be calculated using an index-based formula, or by reference to a published schedule of market prices for specified items.

When would fluctuations provisions be used?

Fluctuations provisions are likely to be of benefit to a contractor in times...

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Web page updated on 21/05/2026

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