Jill Jaffe Discusses Price Uncertainty in Construction Industry
Jill Jaffe was quoted extensively in the Construction Super Conference (CSC) article, “Price Uncertainty Presents Challenges.” The article provides an overview of Jill’s work in the industry and discusses how tariffs can increase market uncertainty but are often only one of many causes of higher prices on construction projects.
When tariffs were instituted, they contributed to numerous cost fluctuations in the industry. Speaking to this, Jill said, “We’re seeing a lot of cost escalation claims, and it’s not only because of tariffs. But tariffs have added a whole layer of uncertainty and price increase potential.”
Jill told CSC that determining what actually causes a price increase—and whether it was possible to avoid—is often the first step she takes in her work. Recalling an arbitration she was involved in where a contractor delayed ordering materials, she said, “The materials cost more, but that wasn’t the owner’s fault, and it could have been mitigated if the contractor had acted quickly.”
Contract language and the project record are also important. In another price-escalation dispute, the parties disagreed over a change-in-law provision. “It was based on a change-in-law argument. The owner and the contractor read the contract differently, which is common. The owner ultimately prevailed because of a factual showing,” Jill added. The timing evidence proved decisive. “The owner demonstrated that the materials at issue were purchased either before the tariff had any impact on the market, or after the tariff had an impact on the market. Typically change-in-law provisions are quite broad and depend on the contract language. However, tariffs could constitute a change in law, unless expressly carved out.”
Even projects subject to federal Buy America requirements may feel tariffs indirectly through domestic pricing. That makes precise drafting essential. Jill commented on this by saying, “It goes back to contract drafting and having an understanding between the parties. If tariffs are having an indirect effect, does that qualify under whatever language may be applicable under the contract or not? That also makes it a complicated, fact-intensive question as to whether tariffs on foreign goods may impact pricing of domestic products.”
Jill noted that supply disruption can drive both schedule and cost claims “because if there’s delay, there can be cost escalation, which could be related to tariffs. Those types of claims were fairly common during COVID when there was a lot of supply chain disruption and usually pursued under a force majeure clause.”
For owners and contractors, the practical goal is to allocate risk clearly before work begins. Contractors often bear escalation risk by default, although owners may accept a defined share to secure more predictable pricing. Jill pointed out that express exclusions, material-specific clauses and price indexes are useful tools for allocating risk. “There can be express exclusions in the contract, which state that the contractor is responsible for a cost escalation. New clauses have to do with what happens if there’s specific tariffs or price increases related to certain materials. Price indexes help to allocate some of the costs. If the cost escalation of steel is less than the applicable indexes, that price escalation is on the contractor. If it’s more than the price index, then the owner will cover it. The idea is to use an objective reference point rather than having to calculate it if a dispute arises.”
