JCT Contract Administration
The position in general law regarding payment for building works is that (assuming a lump-sum contract) increases in the factor costs of construction during the project period are at the risk of the contractor. This would include increases caused by normal inflation and increases brought about by imposition of taxes etc. (unless these were so onerous that they had the effect of frustrating the contract). The contractor has more knowledge about increased costs and the general risks of building than the employer and thus would normally be better placed to price for them. Excluded from this would be increases caused by the action of the employer. Thus, increased costs are payable, if incurred, on variation additions and similar items.