Plain English Explanation
X1 provides for the contract price to be adjusted upward (or downward) to reflect changes in the price level of labour, materials, and plant between the base date and the date of work. It uses a formula based on published price indices (typically ONS/BCIS indices in UK construction).
If X1 is included, the Contractor is not bearing the full risk of inflation during the project. Particularly on long-duration projects, inflation can significantly erode the real value of a lump sum price. X1 protects against this. Without X1, all inflation risk sits with the Contractor.
The formula, base date, and indices must be clearly defined in the Contract Data for X1 to work effectively.
Key Takeaway
On any project lasting more than 12 months, X1 not being in your subcontract means you carry the full inflation risk that the main contractor has been protected against — negotiate for it at tender, not mid-project.
What This Means for Subcontractors
On multi-year projects, inflation risk is real and material. If X1 is in the main contract but not passed down into your subcontract, you bear the full inflation risk while the main contractor is protected. Push for X1 to be included in your subcontract on any project lasting more than 12 months.
Common Risks & Disputes
- 1X1 not being passed down into subcontracts, leaving subcontractors unprotected from inflation
- 2Base date not being clearly defined, leading to disputes about the reference period
- 3Published indices not tracking actual cost movements in your specific trade
- 4Formula being overly complex and difficult to administer accurately
- 5Inflation adjustments being calculated infrequently, creating cashflow timing issues
Sources
Related Clauses
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