Work out contract escalation formula instantly with clear inputs, formula shown and shareable results.
A standard price adjustment formula splits contract value into labour, material and a fixed non-adjustable portion — commonly 15%. Each variable element is escalated by its own published index, so the effective escalation is always lower than the highest individual index movement.
Weights
Fixed 15%; Labour as specified; Material = 100% - Labour - Fixed
Adjustment
Adjustment % = Labour weight x Labour index change + Material weight x Material index change
Revised value
Revised = Base value x (1 + Adjustment %)
Indicative estimate only. Fees, entitlements, limits and formulas vary by jurisdiction, statute, policy wording and the facts of the case. This is not legal, tax, insurance or financial advice — confirm with a qualified professional or the relevant authority.
Because profit and overhead are not directly exposed to input inflation. It is a standard 10-15% in most public works formulas.
Published national or sectoral indices with a clear base date, named explicitly in the contract. Vague references are the main cause of escalation disputes.