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What is contract price adjustment?
A workable formula method of contract price adjustment simplifies accounting procedures and generally provides for acceptable reimbursement. The CPAP reflects price changes as closely as possible within the philosophy of an index-based system.
What is price adjustment in construction contracts?
Price adjustment is a modification made to the overall price of a contract to take account of legitimate changes in the costs of performing the contract. ... First, contractors will build in price contingencies for input price increases over the life of a contract.
What is a price variation clause?
a clause in a contract allowing the seller to vary the selling price under certain conditions.
What is the meaning of price escalation?
A disparity in pricing where goods have higher costs in a foreign market than in the domestic market due to transportation and exporting costs. Price escalation can also refer to the sum of cost factors in the distribution channels which add up to a higher final cost for a product in a foreign market.
What is an escalation clause and how is it used in the construction contract?
An escalation clause is a provision in a contract that calls for adjustments in fees, wages, or other payments to account for fluctuations in the costs of raw materials or labor. This clause shifts the burdens for increasing materials and labor costs from the contractor to the client.
What is a price adjustment clause?
Price adjustment clauses in contractual agreements. ... A price adjustment clause is often used in transactions if property is transferred between non-arm's length taxpayers and the intention of the parties is for the transaction to occur at fair market value (FMV).
What is an economical price adjustment?
Economical price adjustments are of three general types: (1) Adjustments based on established prices. These price adjustments are based on increases or decreases from an agreed-upon level in published or otherwise established prices of specific items or the contract end items.
What is fixed price with economical price adjustment?
A fixed price with economical price adjustment contract allows for changes in price, either positive or negative, under certain circumstances. When a contract of this nature is in place, price adjustments can be made when there are market fluctuations that are beyond the seller's control.
What is a fixed price incentive fee contract?
The term firm fixed price contract refers specifically to a type or variety of fixed price contract where the buyer or purchaser pays the seller or provider a fixed amount, however that this particular set amount may waver of vary if the seller meets some sort of PRE designated criteria related to the performance of ...
What is a fixed fee contract?
A fixed-price contract is a type of contract where the payment amount does not depend on resources used or time expended. This is opposed to a cost-plus contract, which is intended to cover the costs with additional profit made.
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