Steel, cement, sand and stone prices swing sharply during construction — who bears the price-difference risk? The answer lies in the contract type the parties signed and the price adjustment mechanism agreed in the contract, under Article 24 of Decree 210/2026/ND-CP and Clause 3, Article 84 of the 2025 Construction Law.
This article analyzes when prices may be adjusted, when they may not, and the traps that cost contractors their adjustment rights even as material prices soar.
1. The “check the contract type” principle
Decree 210/2026 classifies contracts by price form (Article 6), each with a different adjustment mechanism:
- Adjustable unit price contracts: unit prices and contract prices may be adjusted per contractual agreements for all work contents — the contract type “born” to handle price fluctuations;
- Time-based, mixed contracts and other contracts permitted price adjustment: adjustable as agreed;
- Lump-sum contracts: prices do not change during performance, except for: force majeure, fundamental change of circumstances, scope changes, or other cases agreed by the parties;
- Fixed unit price contracts: unit prices do not change, except per Point b, Clause 2, Article 24, force majeure, fundamental change of circumstances or other agreements.
2. Conditions and methods of price adjustment
For contracts eligible for adjustment (especially public investment and PPP projects), unit price and contract price adjustments must follow:
- Adjustment per the contents, scope, methods and bases agreed in the contract, consistent with law — meaning the adjustment mechanism must be “built in” from the start (price indices, data sources, escalation formulas…);
- When contract amendment changes the performance period but does not exceed the approved project duration, the approved package price (including contingency) or the total investment: the investor may consider and decide the amendment;
- Amendable contents may include: contract type, price form, price adjustment method, and price adjustment data sources.
3. Force majeure and fundamental change of circumstances — the common “safety valve”
Even for lump-sum or fixed unit price contracts, upon force majeure or fundamental change of circumstances (e.g., material price movements of an extraordinary degree, beyond reasonable foreseeability at заключения), the investor may consider amending the contract under the principles: no change to investment objectives or scale; no exceeding the approved total investment; ensuring investment efficiency and avoiding losses and waste. This is a key new point of the 2025 Construction Law, aligned with the 2015 Civil Code.
4. The biggest trap: excessive advances forfeit adjustment rights
Few contractors notice this rule: where parties agree on advances above the minimum advance level, the contract price portion corresponding to the excess advance shall not be price-adjusted from the time of advance — including multiple advances. In other words, accepting a “generous” advance means locking part of the contract price out of the adjustment mechanism. When negotiating advances, contractors should weigh this trade-off carefully.
5. Distinguishing price adjustment from arising volumes
Two frequently confused mechanisms:
- Price adjustment: prices/unit prices of works already in the contract change due to input factor fluctuations, per the agreed mechanism;
- Arising volumes: works outside the contract scope, requiring parties’ agreement and confirmation before amending or supplementing the contract.
Mixing these two concepts when preparing payment dossiers is a common reason dossiers are returned or cut at settlement.
Frequently asked questions
Q: After signing a lump-sum contract, steel rises 30% — can prices be adjusted?
A: In principle, lump-sum contracts are not price-adjusted. But if the increase qualifies as a fundamental change of circumstances (beyond reasonable foreseeability at заключения), parties may agree to amend the contract; for public investment projects, the investor considers and decides without exceeding the total investment.
Q: To secure adjustment rights, what should I note when signing?
A: Three things: (1) choose the right contract type (prefer adjustable unit price if fluctuations are forecast); (2) “build in” the adjustment method, data sources and formulas in the contract; (3) weigh the advance level — advances above the minimum forfeit adjustment rights for the corresponding portion.
Q: Must adjustments stay within the total investment?
A: Yes. All amendments and adjustments must not exceed the approved total investment (unless an adjustment is approved) — a hard limit, especially for public investment and PPP projects.
Need advice on price clauses and adjustment mechanisms in construction contracts? Contact us for advice.
This article was prepared by the FLAW AI Legal Council. Content is pending QA Council review before submission for approval; information is for reference only and does not replace legal advice for your specific case.
