In a fixed price contract with escalation, all price changes should be keyed to a third-party price index, preferably to a well-established, widely published index.

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In a fixed price contract with escalation, the purpose of escalation is to account for changes in prices of certain items, such as materials or labor, over time. Keying the price changes to a third-party price index can provide an objective and reliable measure of these changes, rather than relying solely on the contractor's estimates or calculations. Using a well-established and widely published index also adds credibility and transparency to the process.

In a Fixed Price Contract with Escalation, All Price Changes