Construction Escalation Clauses Guide

If you’ve ever finished a project and realized you made less money than you planned because steel or lumber jumped mid-job, you already understand the problem. You just might not have known there’s a contract tool built specifically to handle it.

Escalation clauses have been around for decades in commercial and government construction. But a lot of residential and small commercial contractors have never used one. Some have never even heard the term. That changed fast after 2020 when material prices started moving in ways nobody could predict, and contractors who didn’t have escalation language in their contracts took serious hits to their bottom line.

This guide breaks down exactly how escalation clauses work, when you need them, how to calculate price adjustments, and the difference between index-based and fixed escalation methods. If you’re signing contracts on jobs that take more than a couple months to complete, this is the stuff you need to know.

What Is an Escalation Clause and Why Does It Matter?

An escalation clause is a section in your construction contract that says: if the cost of specific materials changes by more than a set amount between the time we signed this deal and the time we actually buy those materials, the contract price adjusts to reflect that change.

That’s it. No mystery. It’s a risk-sharing mechanism written into the contract before work begins.

Without one, you carry 100% of the risk on material prices. If lumber goes up 15% three months after you signed a fixed-price contract, that comes straight out of your pocket. Your labor costs are the same. Your overhead is the same. But your material line items just blew past what you estimated, and your profit margin shrinks or disappears entirely.

With an escalation clause, you and the owner agree upfront how to handle that scenario. The clause defines which materials are covered, what triggers an adjustment, and how the math works. If prices go up past the threshold, the contract price goes up. If prices drop past the threshold, the contract price goes down. Both sides share the volatility instead of the contractor absorbing all of it.

This matters more now than it did ten years ago. Material prices used to be predictable enough that most contractors could carry the risk without thinking twice. A 2-3% annual increase on most categories was normal and easy to bake into your estimate. But since 2020, we’ve seen lumber swing by triple digits, steel double, and concrete climb steadily with no ceiling in sight. Add tariff uncertainty on top of that, and you’re looking at a market where a 90-day bid window can cost you thousands of dollars in margin if you don’t have protection in the contract.

If you’re still pricing jobs with the assumption that your material costs will hold steady from estimate to purchase, it’s time to rethink that approach. And the first place to start is your contract language.

When to Include Escalation Clauses in Your Contracts

Not every job needs an escalation clause. A two-week bathroom remodel where you’re buying materials the day after signing probably doesn’t need one. But more jobs need them than most contractors realize.

Here’s a straightforward set of criteria. If your project hits any of these, you should have escalation language in the contract:

Project duration exceeds 60 days. The longer the gap between your estimate and your last material purchase, the more exposure you have. Anything over two months gives the market enough time to move against you.

Materials make up more than 40% of the project cost. On material-heavy jobs like framing packages, structural steel, or large concrete pours, even a moderate price swing hits hard. If materials are a small slice of the total, the risk is lower.

You can’t get a firm supplier hold for the full project. Many suppliers will hold pricing for 30 or 60 days. Some won’t hold at all during volatile periods. If your supplier can’t guarantee pricing through your build schedule, you need a clause that covers the gap.

The project involves volatile material categories. Lumber, steel, copper, aluminum, and petroleum-based products (asphalt, roofing materials, PVC) are the most volatile categories. If your job is heavy on any of these, escalation language is a must.

Government or institutional projects with long procurement timelines. Public projects often have months between bid submission and notice to proceed. That dead time is pure exposure for the contractor.

For most commercial and residential contractors doing work that stretches beyond a couple months, escalation clauses should be standard in every contract template. Not an add-on. Not a negotiation chip. Standard.

The conversation with your client is simpler than you think. You’re not asking for a blank check. You’re saying: “We want to give you a fair price today, and if material costs change significantly in either direction during the project, we’ll adjust the contract based on a formula we both agree to right now.” Most owners understand that’s reasonable, especially the ones who’ve been through a project where the contractor tried to cut corners because they got squeezed on materials.

Understanding different contract types helps here. Cost-plus contracts handle price volatility naturally since the owner pays actual costs. Fixed-price contracts are where escalation clauses become critical. And if you’re working with a cost-plus vs. fixed-price structure, knowing where escalation fits into each model will make you a better negotiator.

Index-Based Escalation: Tying Adjustments to Published Data

Index-based escalation is the gold standard for larger projects and is the method used on most government and institutional work. It ties your price adjustments to a published, third-party price index that neither you nor the owner controls.

The most commonly used index in U.S. construction is the Bureau of Labor Statistics (BLS) Producer Price Index (PPI) for construction materials. The BLS publishes monthly data on specific material categories, including:

• PPI for Lumber and Wood Products (Series ID: WPU08)
• PPI for Steel Mill Products (Series ID: WPU1017)
• PPI for Concrete Products (Series ID: WPU1332)
• PPI for Asphalt and Roofing Materials (Series ID: WPU0513)
• PPI for Copper and Brass Mill Shapes (Series ID: WPU1025)

The Engineering News-Record (ENR) also publishes construction cost indexes that some contracts reference, though the BLS data is more granular and more widely accepted in contract disputes.

Here’s how an index-based escalation clause works in practice:

Step 1: Establish the base index value. At the time of contract signing, you record the relevant PPI value for each covered material category. This is your baseline.

Step 2: Define the trigger threshold. The clause specifies a percentage change that must occur before an adjustment kicks in. Common thresholds are 5%, 7%, or 10%. Anything below the threshold is considered normal market movement and the contractor absorbs it.

Step 3: Set the measurement interval. You decide when to compare current index values to the baseline. This might be monthly, quarterly, or at the time of material purchase.

Step 4: Apply the adjustment formula. When the index change exceeds the threshold, you calculate the adjustment. A typical formula looks like this:

Adjustment = (Current Index - Base Index) / Base Index x Material Line Item Value

So if your base PPI for steel was 280, the current PPI is 310, and your steel line item was $50,000:

(310 - 280) / 280 x $50,000 = $5,357 adjustment

The beauty of index-based escalation is that it’s objective. Nobody argues about whether the price really went up because the BLS data is published and publicly available. It also works both ways, so if the index drops, the owner gets a credit.

The downside is administration. Someone has to track the index values, run the calculations, and process change orders. On a large project with multiple material categories, this can be a real workload. Having good budget management tools makes this significantly easier since you can track actual costs against your baseline in real time.

Fixed-Rate Escalation: The Simpler Alternative

Fixed-rate escalation takes a different approach. Instead of tracking actual market data, you and the owner agree to a predetermined percentage increase that applies at set intervals throughout the project.

A fixed-rate clause might read: “Material costs shall be subject to an escalation adjustment of 3% for every six-month period following the contract date.”

The advantages are obvious. It’s simple. There’s no index tracking, no complicated formulas, no monthly data pulls. Both parties know exactly what the potential adjustments are from day one. It’s easy to budget for and easy to administer.

The disadvantages are equally obvious. If material prices go up 15% and your clause only allows for 3% every six months, you’re still underwater. And if prices stay flat or drop, you’re getting an increase you don’t need while your client pays more than they should.

Curious what other contractors think? Check out Projul reviews from real users.

Fixed-rate escalation works best when:

• Projects are shorter (6-12 months) where one or two adjustment periods are enough
• The contract value is smaller and the administrative burden of index tracking isn’t justified
• Both parties want simplicity and are willing to accept the trade-off of less accuracy
• Historical price trends are relatively stable for the materials involved

For residential contractors doing additions, remodels, or custom homes that take 6-9 months, fixed-rate escalation is often the practical choice. You’re not going to hire someone to track BLS data on a $200,000 kitchen remodel. But a clause that says “materials adjust 4% if the project extends past the 6-month mark” gives you a floor of protection without adding paperwork.

For larger commercial work, especially anything over $500,000 or lasting more than a year, index-based escalation is almost always the better choice. The accuracy justifies the administrative effort, and the amounts at stake make it worth doing right.

Some contractors use a hybrid approach: fixed-rate escalation as the default, with a trigger clause that switches to index-based calculation if any single material category moves more than a certain percentage (say 15%). This gives you simplicity for normal conditions and accuracy when things get wild.

Calculating Price Adjustments: Step-by-Step

Whether you’re using index-based or fixed-rate escalation, you need to know how to actually calculate and document adjustments. Here’s the process that holds up to scrutiny and keeps your client relationships intact.

1. Document your baseline pricing.

The day you sign the contract, record every material cost assumption in your estimate. Save supplier quotes with dates. If you’re using index-based escalation, record the specific index values for each covered category. This baseline documentation is your foundation. Without it, you have nothing to measure against.

Good estimating practices are critical here. If your original estimate was sloppy, your escalation calculation starts from a shaky foundation.

2. Track material purchases against the baseline.

As you buy materials during the project, record the actual purchase price, the date, and the quantity. Compare each purchase to your baseline price for that item. Keep receipts, invoices, and purchase orders organized and accessible.

3. Determine if the threshold is met.

Add up the total price change for each covered material category. Compare it to your trigger threshold. If you’re using index-based escalation, pull the current index value and calculate the percentage change from your baseline.

For example, if your threshold is 5% and lumber has gone up 8% since contract signing, the clause is triggered. If it’s only gone up 3%, it’s not.

4. Calculate the adjustment amount.

For index-based: use the formula from your clause (typically the one described in the previous section).

For fixed-rate: apply the agreed percentage to the relevant material line items.

For a direct-comparison method (where you compare actual purchase prices to baseline quotes rather than using an index): subtract the baseline unit price from the actual unit price, multiply by the quantity purchased, and that’s your adjustment.

5. Submit a formal change order.

Don’t just tell your client the price went up. Submit a written change order with the baseline documentation, the current pricing or index data, the calculation, and the resulting adjustment amount. Attach supporting documents: supplier invoices, BLS index printouts, or purchase orders.

A professional change order process protects both parties and prevents disputes later. This is also where material management systems pay for themselves since you can pull purchase history and cost comparisons without digging through filing cabinets.

6. Apply the adjustment to your billing.

Once the change order is approved, incorporate the adjustment into your next progress billing. Keep the escalation adjustment as a separate line item so both you and the owner can see exactly what portion of the bill reflects the original contract and what portion reflects the price adjustment.

A note on caps. Many escalation clauses include a maximum adjustment cap, often 10-15% of the total material budget. This protects the owner from runaway costs while still giving you meaningful protection. Including a cap makes owners more comfortable agreeing to escalation language, and honestly, if materials move more than 15%, you’re probably having a different conversation about whether the project scope needs to change entirely.

Protecting Your Margins in Volatile Markets

Escalation clauses are your most important tool, but they’re not your only tool. Protecting your margins in a market where prices move fast requires a multi-layered approach.

Shorten your bid validity window. If your proposals are good for 90 days, you’re carrying 90 days of price risk for free. Cut that to 30 days, or even 15 days during highly volatile periods. If the client takes two months to make a decision, they get a re-priced proposal. This is standard practice now for contractors who know what they’re doing.

Lock in supplier pricing early. The moment you get a signed contract, lock in material pricing with your suppliers. Get purchase orders in place for bulk materials. Some suppliers offer forward pricing agreements where they’ll hold a price for 60 or 90 days in exchange for a commitment. Take those deals on your most volatile categories.

Build a material contingency into every estimate. Separate from your escalation clause, include a material contingency line item of 3-8% in your estimate. This is your buffer for small price movements that fall below the escalation threshold. Being transparent about this with your client is better than hiding it in inflated line items. Smart contractors explain it as “market volatility protection,” and most owners get it.

Use real-time cost tracking. You can’t protect margins you’re not measuring. If you’re still reconciling job costs at the end of a project, you’re finding out you lost money after it’s too late to do anything about it. Track actual material costs against your budget weekly. When you see a category trending over budget, you can trigger your escalation clause, adjust your procurement strategy, or have a conversation with the owner before the problem grows. Solid cost tracking and budget variance analysis keeps you ahead of the curve instead of reacting to bad news.

Diversify your supplier relationships. Relying on a single supplier for any major material category is risky in volatile markets. When your one lumber yard can’t hold pricing, having a second and third option gives you negotiating power and alternatives. This doesn’t mean chasing the cheapest price on every order. It means having relationships with multiple suppliers who know your business and compete for your work.

Understand your markup and margin math. A lot of contractors confuse markup and margin, and the difference matters a lot when prices shift. If you’re marking up materials 20% and your material costs jump 10%, your dollar margin stays the same but your percentage margin drops. Knowing the difference between markup and margin helps you set escalation thresholds that actually protect your bottom-line profit, not just your top-line revenue.

Communicate with your clients constantly. The worst thing you can do during a volatile market is go quiet and hope prices come back down. If you see material costs trending up, tell your client early. Share the data. Show them the index charts. Give them options: buy materials now at current prices, wait and risk paying more, or substitute alternative materials. Clients who feel informed and included are far more likely to approve escalation adjustments without a fight.

Protecting your margins isn’t about any single tactic. It’s about building a system where you price jobs accurately, track costs in real time, have contract language that shares risk fairly, and communicate proactively when the market moves. The contractors who do all four of these things consistently are the ones who stay profitable no matter what material prices do.

Want to put this into practice? Book a demo with Projul and see the difference.

Contract Language That Actually Holds Up

Writing an escalation clause that works in theory is one thing. Writing one that holds up when a client pushes back or an attorney picks it apart is another. The difference comes down to specificity. Vague escalation language creates arguments. Precise language creates a process both parties follow without drama.

Here are the elements every escalation clause needs to include, with no exceptions:

Covered materials list. Don’t write “all materials.” Specify exactly which material categories the clause covers. “Structural steel, dimensional lumber, ready-mix concrete, and copper wiring” is clear. “Materials and supplies” is not. If a material isn’t on the list, it’s not covered. This protects the owner from open-ended risk and forces you to think about which categories actually carry enough volatility to justify coverage.

Base price or base index reference. State the exact price or index value at contract signing. Include the date, the source, and the specific series ID if you’re using BLS data. “BLS PPI Series WPU1017 (Steel Mill Products), value 289.4 as of June 2024” leaves no room for interpretation. A baseline that says “current market pricing” is useless in a dispute.

Trigger threshold with clear direction. State the percentage change required to activate the clause, and state whether it applies to increases only, decreases only, or both. “Adjustments apply when the applicable index changes by more than 5% in either direction from the base value” is bulletproof. Bilateral clauses (both directions) are easier to get owners to accept because they demonstrate good faith.

Measurement timing. When do you check prices? Monthly? At the time of each material purchase? Quarterly? Specify it. “Adjustments shall be calculated based on the index value published for the month in which the material is purchased” ties the calculation to a specific, verifiable moment.

Adjustment cap. Include a maximum total adjustment, usually expressed as a percentage of the total material budget or total contract value. “Total escalation adjustments shall not exceed 12% of the original material budget” gives the owner a ceiling they can plan around. Without a cap, many owners (and their lenders) will reject the clause outright.

Notice and documentation requirements. Spell out how the contractor must notify the owner of an adjustment, what supporting documentation is required, and how many days the owner has to review before the adjustment takes effect. “Contractor shall provide written notice with supporting index data and calculations at least 14 days prior to applying any adjustment” is standard.

Dispute resolution. What happens if the owner disagrees with your calculation? A short paragraph that specifies the resolution process (negotiation, then mediation, then arbitration, or whatever your standard dispute terms are) prevents a pricing disagreement from derailing the whole project.

Here’s what a complete clause looks like in practice:

“The contract price for [lumber / steel / concrete] shall be subject to adjustment based on changes in the Bureau of Labor Statistics Producer Price Index, Series [ID], measured from the base value of [X] as published for [month/year]. If the index value at the time of material purchase differs from the base value by more than 5% in either direction, the applicable material line items shall be adjusted proportionally. Total adjustments under this clause shall not exceed 12% of the original material budget. Contractor shall submit written notice of any adjustment with supporting index data and calculations no fewer than 14 days before incorporating the adjustment into a progress billing. If Owner disputes the calculation, the parties shall resolve the dispute in accordance with Section [X] of this agreement.”

That paragraph covers every element. It’s specific enough to enforce and clear enough that both parties understand what they agreed to. Contrast that with clauses that say things like “prices may be adjusted if market conditions change materially,” which is practically unenforceable because “materially” means something different to everyone.

One more thing: have your attorney review your escalation clause template once, then use it consistently across projects. You don’t need a lawyer to customize it for every contract, but you do need one to confirm the language holds up in your state’s legal framework. Contract law varies by jurisdiction, and a clause that’s enforceable in Texas might have issues in California.

If you’re building or updating your contract templates, understanding the full picture of construction contract types will help you decide where escalation clauses fit within each structure.

Real-World Escalation Scenarios: Lessons from the Field

Theory is great. But contractors learn the most from seeing how escalation clauses play out on actual projects. Here are four scenarios based on common situations that illustrate both the wins and the mistakes.

Scenario 1: The lumber spike that ate a framing contractor’s profit.

A framing contractor signed a fixed-price contract for a 12-unit townhome project in early 2021. Total contract value was $480,000, with lumber making up roughly $180,000 of the budget. The contract had no escalation clause. By the time the contractor started ordering lumber four months later, prices had nearly tripled. The actual lumber cost came in at $390,000, more than double the estimate. The contractor finished the job at a loss of over $100,000.

With a basic index-based escalation clause using BLS lumber data and a 5% trigger, the contractor would have submitted adjustment change orders totaling approximately $195,000. Even with a 15% cap on material adjustments ($27,000 max), the contractor would have recovered at least $27,000 of that loss. Not perfect, but the difference between a painful lesson and a business-ending disaster.

Scenario 2: The commercial GC who used escalation clauses correctly.

A general contractor on a $3.2 million commercial office buildout included index-based escalation clauses for steel, concrete, and electrical copper. The project ran 14 months. Steel prices rose 9% during the build, triggering the clause. The GC submitted a change order for $18,400 with BLS index documentation, supplier invoices, and the calculation laid out step by step. The owner approved it within a week. Concrete and copper stayed within the 5% threshold, so no adjustments were needed on those categories.

The key takeaway: the GC didn’t just have the clause in the contract. They tracked the indexes monthly, maintained organized purchase records, and submitted a professional change order package that left no room for argument. The administrative effort was maybe 2-3 hours per month of index tracking and documentation. That time investment recovered $18,400 in margin.

Scenario 3: The remodeler who used fixed-rate escalation on a kitchen gut job.

A residential remodeler signed a $185,000 kitchen remodel with a 6-month timeline. The contract included a fixed-rate escalation clause: “Material costs shall adjust by 4% if the project extends beyond 6 months from the contract date.” The project hit delays (permitting, client change orders, a backordered appliance) and stretched to 9 months. The remodeler applied the 4% adjustment to the $72,000 material budget, adding $2,880 to the contract.

The client pushed back initially, but the remodeler pointed to the signed contract, explained the clause, and showed that material costs had actually gone up closer to 6% during the delay period, meaning the 4% adjustment was generous. The client approved it. Simple, professional, fair.

Scenario 4: The contractor who had escalation language but couldn’t enforce it.

A subcontractor included an escalation clause in a concrete contract, but the language was vague: “Prices may be adjusted if material costs increase significantly.” When concrete prices rose 11% over the course of the project, the sub submitted a change order. The GC rejected it, arguing that 11% wasn’t “significant” and that the clause didn’t specify a threshold, an index, or a calculation method. The sub had no recourse because the clause was essentially meaningless without those specifics.

This is the scenario that should keep you up at night. Having an escalation clause in your contract is not the same as having an enforceable escalation clause. The language matters. The specifics matter. If you can’t point to a number, a formula, and a data source, your clause is just words on a page.

These scenarios drive home a consistent point: escalation clauses work when they’re specific, documented, and administered professionally. They fail when they’re vague, ignored, or treated as an afterthought.

Good project scheduling habits also play a role here. The longer a project drags past its planned timeline, the more exposure you have to price swings. Keeping projects on schedule is one of the best ways to minimize the need for escalation adjustments in the first place.

How to Talk to Clients About Escalation Clauses

A lot of contractors avoid escalation clauses because they’re worried about the client conversation. They think it makes them look like they don’t stand behind their pricing, or that it’ll scare clients away. The opposite is true. Bringing up escalation language in a professional way actually builds trust, because it shows you’ve thought carefully about risk and you want to deal with it honestly rather than padding your estimate with hidden contingencies.

Here’s a framework for that conversation:

Start with the “why.” Don’t open with the clause itself. Open with the market reality. “Material prices have been unpredictable for the past few years, and I want to make sure we handle that fairly for both of us.” Most clients have read the news. They know prices have been volatile. You’re not telling them something surprising. You’re showing them you have a plan for dealing with it.

Explain the alternative. Without an escalation clause, contractors have two choices: either pad the estimate by 10-15% to cover potential price swings (which means the client overpays if prices stay flat), or carry the risk and potentially cut corners if costs spike. Neither option is good for the client. An escalation clause is the third option, where both sides share the risk and the price reflects actual costs rather than worst-case assumptions.

Emphasize the bilateral nature. “If material prices go down, your project cost goes down too.” This single sentence changes the entire tone of the conversation. It turns the clause from “contractor protecting himself” to “fair deal for both of us.” Always write bilateral clauses and always lead with this point in client discussions.

Show them the math. Walk through a simple example. “If steel goes up 8% from today’s price, here’s what the adjustment would be on your project. If it stays within 5%, there’s no adjustment at all.” Concrete numbers are less intimidating than abstract contract language. Most clients are business people or homeowners who understand that prices change. They just want to know the exposure is bounded and the process is transparent.

Reference the cap. “The total adjustment is capped at [X]%, so you have a ceiling you can plan around. You’ll never be surprised by an open-ended increase.” The cap is your closer. It takes the fear of the unknown off the table.

Put it in the proposal, not just the contract. Don’t wait until the contract signing to introduce escalation language. Mention it in your proposal or scope letter so the client has time to absorb it, ask questions, and get comfortable before they see it in formal contract language. Surprising a client with unfamiliar terms at signing is a bad experience even if the terms are fair.

Be ready for the “nobody else does this” objection. Some clients will say their other bids didn’t include escalation clauses. Your response: “That means those contractors are either carrying the risk and might cut corners if prices spike, or they’ve padded their numbers to cover themselves. We’d rather give you an honest price and a transparent process for handling changes.” This positions you as the straightforward professional in a competitive bid, which is exactly where you want to be.

The contractors who have the best closing rates with escalation clauses are the ones who treat it as a standard part of their process, not a special request. When you present it with confidence and clarity, clients see it as a sign of professionalism, not a red flag.

For more on building accurate proposals that set the right expectations from the start, check out the construction estimating guide.

Common Mistakes Contractors Make with Escalation Clauses

Even contractors who use escalation clauses regularly make mistakes that weaken their position. Here are the most common ones and how to avoid them.

Using vague language. This is the number one mistake and it makes the clause unenforceable. “Prices may be adjusted if costs increase” means nothing in a dispute. Every element needs a specific value: which materials, what index or price source, what threshold, what formula, what cap.

Forgetting to document the baseline. You sign the contract, you get busy, and you never record the base index values or supplier quotes. Three months later when you need to calculate an adjustment, you’re scrambling to reconstruct pricing that may have already changed. Document your baseline on signing day. Save it in your project file. Do it before you leave the table.

Not tracking indexes during the project. Having the clause in the contract doesn’t help if you never check whether the trigger has been met. Set a calendar reminder to pull index data monthly, or assign someone on your team to track it. Automated cost tracking through your construction project management software makes this easier since you can compare actual purchase prices against your baseline without manual spreadsheet work.

Waiting too long to submit adjustments. If material prices triggered your clause four months ago and you’re just now submitting the change order, you’ve lost credibility and negotiating position. Submit adjustments promptly, ideally within 30 days of the trigger event. Late submissions look like afterthoughts or cash grabs, even when they’re legitimate.

Only including upward adjustments. One-directional clauses (prices go up, never down) are harder to negotiate and easier for owners to challenge. Bilateral clauses are fairer, easier to sell, and more likely to hold up if challenged. Always write them both ways.

Skipping the cap. No adjustment cap means unlimited exposure for the owner, and most owners (or their lenders and attorneys) will reject the clause. Include a reasonable cap, typically 10-15% of the material budget, and you’ll get far fewer pushbacks.

Not having a legal review. Using contract language you found on the internet or copied from another contractor’s agreement without having your own attorney review it is a risk. State laws on contract modification, notice requirements, and enforceability vary. A one-time legal review of your escalation clause template is a small investment that prevents expensive problems later.

Treating escalation as a substitute for good estimating. An escalation clause protects you from market swings you can’t predict. It doesn’t protect you from a bad takeoff, missed quantities, or sloppy material calculations. Your estimate still needs to be accurate on day one. The clause handles what happens after that.

Avoiding these mistakes is the difference between a contractor who has escalation clauses in their contracts and a contractor who actually collects on them when the market moves. The clause is only as good as the process around it.

The days of estimating a job, signing a contract, and forgetting about material costs until the invoices come in are over. If you’re serious about your margins and staying ahead of cost overruns, escalation clauses and disciplined cost tracking need to be part of every project, every time.