Introduction
In recent years, the new energy industry has seen the emergence of explosive growth, with projects such as photovoltaic power plants, wind farms, energy storage facilities, recharge-post infrastructure, and the simultaneous acceleration of construction activities such as new energy station roads, cable lines, and civil works at transformation stations. However, behind the large-scale construction of new energy projects, a controversy over the price differentials of construction materials is also spreading。
Lithium carbonate, cobalt, copper, aluminium, steel, photovoltaic assembly stubs ... In the past few years, much of the major material involved in the new energy project has gone up by 50 per cent, 100 per cent or more, as if it had been on a roller coaster. The total contract price at the time of the tender quickly turned into an outdated old map in the price storm following the commencement of work。
Who should bear the difference? Can the contract price be adjusted? This is one of the most acute contractual disputes in the area of new energy construction. This paper will systematize the core logic, common handling and operational points of the dispute over price adjustment of materials。
Special context for price fluctuations in new energy engineering materials 1. 1 sectoral characteristics of material price fluctuations
The materials involved in the construction of new energy projects are unique compared to traditional construction projects:
1. 2 what is the gap in the price gap in engineering practice
For example, the construction of an additional civil works for a 100 mw photovoltaic ground power station: the project was awarded at the end of 2021, and the main materials (steel structural support, cable bridge, steel pipe) were included in the bid at current information prices. By the peak of construction in mid-2022, however, steel prices had increased by about 35 per cent over the base period for the tender, and copper cables had increased by about 28 per cent. If settled at the original contract price, the contractor's material losses would exceed 8 per cent of the total contract price, resulting in a direct loss to the project。
Ii. Contract basis and legal basis for material adjustment 2. 1 contract price reduction clause: performance as agreed
Ideally, at the time the contract was signed, the material price adjustment mechanism had been agreed upon. There are three ways to change the mainstream:
(1) the price index method, which uses the base period for solicitation as the basis for linking the price of materials to the price index published in the engineering information, adjusts the contract price to the degree of index variation. This applies to situations where material is of a wide variety and it is difficult to trace it individually。
(2) a price differential adjustment method. The contract provides for the application of an information price issued by the local engineering price management agency to account for the excess when the market price and the information price deviation of a major material exceeds the agreed range (usually ± 5 per cent). This is the most common way to adjust。
(3) the difference between the actual purchase price method is based on the actual purchase invoice of the contractor and is adjusted against the agreed benchmark unit price. The advantage is direct and the disadvantage is that verification requirements for the authenticity of procurement prices are higher。
2. 2 no variation clause in contract: invocation of change of circumstances
When there is no agreement in the contract for fluctuations in the price of materials, or when there is an express agreement that "the total price package is dry and the risk of material prices is borne by the contractor", the construction unit faces a more difficult situation, but it is not without any relief space。
Article 533 of the civil code - the principle of change of circumstances: when a contract is established, the basic conditions of the contract have changed substantially, which the parties could not have foreseen at the time of the conclusion of the contract and which is not a commercial risk, and the continued performance of the contract is manifestly unfair to one of the parties, the aggrieved party may request the other party to re-consult; if this is not possible, the people's court or arbitration body may request that the contract be changed or dissolved。
In practice, the principle of rebus stantibus is invoked subject to certain conditions:
2. 3 determination of the base period for the calculation of price adjustments
In price differential adjustments, the determination of the base period is often the starting point of the dispute:
It is proposed that, when the contract is concluded, the construction unit expressly use "28 days (or 28 days prior to the date of publication of the solicitation documents)" as the sole basis for the price base period and that the baseline price levels for the main materials be clearly stated in the contract, avoiding ex post facto disputes。
Iii. Special issue of new energy engineering under the epc contract model 3. 1
New energy works are heavily based on the epc (design-procurement-construction) master contracting model, with contractors usually rejecting any request for a change on the basis of "epc's lump sum package " , arguing that the contractor has taken the price risk fully into account in the offer。
However, whether the packaged price in the epc master contract covered the material price risk depends on the specific agreement in the contract. If the commercial terms of the epc contract expressly provide for a price-fixing mechanism, the right to exchange is equally protected; in the absence of any price-replacement agreement, the principle of rebus sic stantibus may still be invoked in the event of extreme price fluctuations, but more difficult to prove。
3. 2 distinction between correction of a and b
In the new energy project, part of the critical equipment (e. G. Transformers, photovoltaic components) was provided by the owner, the construction unit was only responsible for installation, and the price risk for this part of the material was borne by the owner, and there was no dispute about the deviation。
However, in the case of b-materials designated by the owner, the contractor's right to change is relatively adequate if the contract requires the contractor to purchase a particular brand and the price of the brand material increases substantially, since the price risk is inherently triggered by the owner's designated procurement requirements。
3. 3 transmission of subcontracted works
If the main contractor subcontracts part of the work, the subcontracting agreement should be consistent with or optimized with the lump sum contract to avoid the transmission fault "the lump sum has a right to set aside, but the subcontract does not agree to do so", which results in the unit profits being reduced upside down。
Iv. Elements of practice: how effectively to promote distribution of right 4. 1
It is argued that the price of the material needs to be revised to include a complete chain of evidence:
Tender base period price vouchers: market information price publication documents or price indices of industry authorities on 28 days prior to the opening of tenders; actual purchase price vouchers: procurement contracts, vat-specific invoices, receipt and inspection of materials; confirmation documents for construction periods: construction time periods when material is actually used, there shall be a certified construction log or receipt and inspection record of hidden works; written records of applications for deviations: when material prices increase, a written request for a deviation is submitted to the awarding party in a timely manner to avoid the risk of being regarded as a tacit acceptance of higher prices. 4. 2 time limits for requests for change
Many contracts provide a time limit for the application for price adjustments, and failure to do so is considered a waiver. It is recommended that the construction unit, when it completes its monthly schedule of progress payments, synchronize the material price differential calculations and treat the request as a routine feature of day-to-day pricing management, rather than as a "suspense operation" at settlement。
4. 3 prior-period lock-in of list of key materials
It is proposed that, at the contract negotiation stage, a list of reconciling materials (including the name of the material, the specification type, the baseline unit price) be included and that it be ensured that the list covers such large quantities of materials as copper, aluminium, steel, lithium carbonate, which are subject to higher price fluctuations. This forward work, which appears cumbersome, is a key prerequisite for effective ex post facto claims of right to adjustment。
Liaoning xinze: price control of new energy projects
Liaoning xinzawa engineering project management ltd. Has been deeply involved in a number of engineering price management projects in the new energy sector in recent years and has accumulated extensive experience in the field of material price differentials。
The department of corporate engineering settlement and price validation provides the following services to customers of new energy works:
The company, which has over 60 professional technicians, with high- and middle-level job titles and registered qualified personnel representing more than 60 per cent of the total, has a team of senior engineers in the field of deep-farming prices and price analysis commissioners familiar with the construction materials market, who can provide one-stop services from data support to dispute resolution for the adaptation of new energy engineering materials。
The three-tier audit system introduced by the company ensures that each price differential measurement report is subject to rigorous data validation and professional scrutiny, that its findings are subject to scrutiny by professional bodies and that it provides the strongest technical endorsement of client claims。
Concluding remarks
The sharp increase in material prices is both a market risk and a contractual risk. In the face of this test, the wisest response is not to start "saying" after prices have risen, but to establish a well-developed adjustment mechanism from the very beginning of the contract, to keep the price differentials recorded throughout the construction process and to produce a complete chain of evidence when the dispute arises。
The nature of price management for construction works is the rational allocation and equitable management of risks. In the wave of the new energy era, professional pricing advisory bodies have been an important force in helping to hold the bottom line in price storms。
