EIC Statement - Indexation clause in international construction contracts

EIC urges fair and flexible indexation mechanisms in construction contracts amid ongoing cost volatility

The European International Contractors (EIC) calls on all stakeholders—employers, financiers, engineers, and contractors—to urgently reassess the use of indexation clauses in international construction contracts. In today’s volatile economic climate, fair and flexible price adjustment mechanisms are essential to protect both parties and ensure the viability of projects.

Since the COVID-19 pandemic and the war in Ukraine, construction input costs have become highly unpredictable. In such times, outdated or absent indexation clauses shift speculative risk unfairly, distort pricing, and jeopardize project delivery. Without suitable adjustments, employers may overpay during high-cost periods, or contractors may suffer unsustainable losses during prolonged inflation or currency fluctuations.

EIC stresses that effective indexation must:

• Use appropriate and project-specific reference indices,

• Apply to relevant portions of the contract value,

• Be timed to reflect actual cost events, and

• Address currency exchange risks clearly.

Rather than relying on broad or outdated formulas, contracts must reflect the real cost structure of each project phase. Properly designed mechanisms support a balanced risk-sharing approach and safeguard infrastructure delivery in an uncertain global market.

Please read the full EIC Statement below.