Can the agreed price be changed due to abnormal changes of cost for materials?

In the latest issue of Construction Law International, published by the International Construction Projects Committee of the International Bar Association (IBA), Setterwalls’  Mattias Wiklund Matala and Julia Gustavsson have contributed an article on the subject of “abnormal changes of costs for materials in construction projects”.

During the past two years, the construction industry in Sweden has faced major challenges due to price increases of building materials. The pandemic, raw material shortages, the war in Ukraine and sanctions against Russia are some of the factors behind the cost increases that have come to affect the Swedish construction industry. In November 2022, Statistics Sweden (Sw: Statistikmyndigheten SCB) announced that the annual rate of the construction cost index in Sweden was at its highest since 1974. As a result of these cost increases, the provisions in the Swedish standard contracts for construction projects, AB 04 and ABT 06, allowing for the adjustment of agreed prices have seen renewed relevance. The specific provisions are set out in chapter 6, section 3 and allow for changes to the agreed price in case of increases or decreases of the cost of material or other necessities. During the spring of 2021, memorandums were written by different industry organisations and in November 2022 the Swedish Transport Administration (Sw: Trafikverket) realised a memorandum dealing with the interpretation of Chapter 6, section 3.

In the article, Mattias and Julia provide an update on the different views relating to chapter 6, section 3 presented by actors within the industry. The full article is available to read here (please scroll down to “Country Update – Sweden”).