How do JCT fluctuation provisions (Options A, B and C) work?
They apply only if your subcontract selects a fluctuations option, and then only by that option's method, from its base date, for what it covers.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
The JCT forms offer three options. Option A adjusts only for changes in contributions, levies and taxes, not for market prices. Option B adjusts for changes in the cost of labour, materials and taxes, measured against a list of basic prices at the base date. Option C adjusts each valuation by formula, using published indices for categories of work. Options A and B make notice a condition of payment: you must give written notice of each qualifying rise within a reasonable time. The formula option works from the indices without one. The options generally stop the adjustment rising for work done after the completion date, as extended. Many subcontracts amend or delete the options, so read your own subcontract's particulars and amendments together. A claim made as a percentage on the account, outside the option's method, is easy to refuse. An assessment that does not run the method is just as easy to challenge.
Example
Illustrative example. The scenario and figures are invented.
The facts
A steel frame subcontractor's JCT subcontract selects the formula option with a base date of 1 March. Its supplier's steel price rises 20% before the frame is bought. The site team adds 20% of the £207,000 steel element, £41,400, to the next application.
What happens
- The main contractor refuses the claim because it is a percentage, not the formula the subcontract selects.
- The formula is run for each month the frame was erected, using the published index for the steel work category, from the base date.
- The index moved an average of 14% over those months, giving an adjustment of £28,980.
- The main contractor's quantity surveyor checks the index values against the published source.
Percentage against formula
| Basis | Amount |
|---|---|
| Supplier's rise, 20% of £207,000 | £41,400 |
| Formula adjustment, index up 14% | £28,980 |
| Agreed | £28,980 |
The outcome
The formula adjustment of £28,980 is agreed. The remaining £12,420 of the supplier's rise stays with the subcontractor, because the formula pays what the index moved, not what one supplier charged.
To have a rise run through your subcontract's fluctuations option by its own method and claimed, see our Price Rise Claim service.