Q81. Write short notes on Escalation Clause.
Ans. If during the period of execution of contract, the price of material or labour etc. Rise beyond a certain limit, the contract price will be increased by an agreed amount. Such clause in contract agreement is called escalation clause.
Escalation claim so far as the rates are concerned may be calculated as under:
For Material= Standard Quantity*( Actual Price- Standard Price)
For Labour= Standard Hours*(Actual Rate- Standard Rate)
The escalation claim will be added in the contract price and value of work certified.