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Clause Analyzer
Paste a price escalation clause and see the formula it implies, its base period, averaging window, publication lag, cap and floor, and an enforceability risk score.
Reads one clause, once. The product runs the mechanism it describes and keeps it correct every cycle.
Clause Analyzer, explained
What is a price escalation clause in a construction contract?
A price escalation clause adjusts a contract's price after signing based on changes in a named index, such as a Producer Price Index (PPI) series, rather than fixing the price for the full term. It typically defines a base period, an adjustment formula, and often a cap or floor limiting how far the price can move.
How do you calculate a PPI-indexed price escalation?
The formula compares a current-period index value to a base-period value, expressed as a ratio, then applies that ratio to the contract price or line-item cost. Clauses commonly specify the index series and code, the averaging window (for example a 3-month rolling average), the publication lag, and whether the adjustment applies retroactively.
What makes an escalation clause hard to enforce?
Ambiguity is the main risk factor: clauses that don't name a specific index series and code, don't define the averaging window, or leave publication lag unaddressed create room for dispute when the index is revised or delayed. Missing a cap or floor also increases the chance both sides interpret the adjustment differently.