Skip to content
A Price Increase Does Not Affect Everyone Equally
When the price of cement, steel or construction chemicals increases, many people assume the extra cost is simply passed on to the customer.
The reality is often far more complicated.
For many construction projects, someone else may be absorbing those additional costs long before the project is completed.
Very often, that someone is the contractor.
The Contract Was Signed Months Ago
Imagine a contractor successfully tenders for a project.
The contract price is agreed.
Work begins.
Then the unexpected happens.
Cement prices increase.
Steel becomes more expensive.
Construction chemicals cost more.
Transportation costs rise.
Fuel prices increase.
Labour costs continue climbing.
Yet the contract price remains exactly the same.
The obvious question becomes:
Can the contractor simply ask for more money?
Not necessarily.
Fixed-Price Contracts Mean Commercial Risk
Many construction projects are awarded on a fixed-price basis.
This means the contractor agrees to complete the works for an agreed contract sum.
Whether additional payment can be claimed depends on the specific contract terms, the allocation of commercial risk and the circumstances of the project.
Simply because material prices increase does not automatically mean the employer or developer must pay more.
No two construction contracts are exactly the same. Whether the project uses a bespoke agreement, FIDIC, PAM, a government standard form or another industry contract, the allocation of commercial risk depends on the contractual terms agreed by the parties.
Subcontractors Often Face Even Greater Challenges
The situation can become even more complicated for subcontractors.
Unlike a direct contract between a developer and the main contractor, subcontractors often operate under their own agreements with the main contractor. Likewise, suppliers have separate commercial agreements governing the supply of materials and products.
When construction material prices increase unexpectedly, suppliers may seek price adjustments under their own contractual arrangements. If commercial negotiations are unsuccessful, deliveries may be delayed, suspended or, depending on the agreement and applicable rights, the supply relationship may be affected.
The main contractor then faces a difficult commercial position.
While suppliers or subcontractors may seek revised pricing, the main contractor may still be bound by a fixed-price contract with the developer that does not automatically allow additional payment.
This can leave the main contractor caught between rising supply costs and contractual obligations that remain unchanged.
In practice, some developers recognise extraordinary market conditions and may be willing to negotiate commercial solutions to keep the project moving.
Others rely strictly on the agreed contract terms.
Every project is different and much depends on the contractual framework, the commercial relationship between the parties and the specific circumstances of the project.
Commercial Reality Is Not Always Black and White
Not every developer or main contractor responds in the same way.
Some recognise that extraordinary market conditions affect the entire construction industry.
Where unforeseen events significantly impact project costs, parties may choose to negotiate commercial solutions to keep the project moving.
Others rely strictly on the agreed contract terms.
Neither approach is universal.
Much depends on the contract, the relationship between the parties and the commercial circumstances surrounding the project.
When Does Competition Law Become Relevant?
Price increases themselves are not illegal.
Raw material shortages.
Higher energy prices.
Inflation.
Transportation costs.
Global supply chain disruptions.
These can all legitimately increase construction costs.
However, competition authorities become concerned when businesses are suspected of coordinating prices rather than competing independently.
Recently, the European Commission issued Statements of Objections to several manufacturers of construction chemicals and three national trade associations, setting out its preliminary view that they may have breached EU competition rules by coordinating price increases for chemicals used in cement, concrete and mortar. (European Commission)
It is important to note that a Statement of Objections is not a final decision.
The companies involved have the opportunity to respond, and the investigation remains ongoing.
Why Does This Matter Beyond Europe?
Construction materials are part of international supply chains.
What happens in one market may influence costs in another.
Businesses around the world increasingly monitor developments in the European Union because EU competition enforcement often shapes international compliance expectations.
For contractors, however, the immediate concern is usually much simpler.
If supplier prices increase…
but the contract price remains unchanged…
who absorbs the loss?
In many projects, the answer may be the contractor or subcontractor.
Construction Is Built on More Than Concrete
Construction projects are often viewed as engineering achievements.
In reality, they are also commercial agreements.
Every allocation of risk.
Every pricing mechanism.
Every payment clause.
Every variation provision.
These contractual terms can become critically important when market conditions change.
A well-managed project is not only about delivering quality work.
It is also about understanding who bears commercial risks when circumstances become more difficult than anyone expected.
Final Thoughts
Not every increase in construction material prices is the result of unlawful conduct.
Most are driven by ordinary market forces.
However, competition law exists to ensure businesses compete fairly and independently.
At the same time, contractors continue facing a commercial reality that many people outside the industry never see.
When prices rise, the contract often determines who pays.
Sometimes it is the developer.
Sometimes it is the contractor.
Sometimes it is the subcontractor.
Understanding contractual risk before signing an agreement may be just as important as understanding the technical aspects of building the project itself.
Construction Projects Need More Than Good Contracts
Construction projects involve more than contracts alone. From reviewing commercial terms and preparing professional business correspondence to documenting project issues and organising contract-related documents, having clear and well-structured documentation can help businesses communicate more effectively and manage commercial risks.
Keywords: EU competition law, European Commission, construction chemicals cartel investigation, building material prices, fixed-price construction contracts, contractors, subcontractors, developers, commercial risk, construction law, contract management, price fluctuations, competition compliance, cement, concrete, mortar, procurement, construction disputes and risk allocation in construction projects
2 August 2026