Price Adjustment Mechanism in Assessing Romanian Public Procurement of Construction Contracts

Following the entry into force of Romania’s Public Procurement Law 98/2016, the use of price adjustment provisions in construction contracts has become a standard practice. This chapter, which presents a comprehensive analysis of the financial implications of eight adjustment formulas applied to public construction projects executed over three durations (12, 24, and 36 months) between 2018 and 2024, is a significant contribution to the field. The analysis was based on a review of legal documents and public procurement contracts between 2016 and 2024. Statistical data sourced from the Romanian National Institute of Statistics (INS), including monthly indices for construction materials, labour, and fuel. Calculations were performed for no advance payments and with standardised profit margins of 5%. The comparative analysis using objective indices published by Romania’s National Institute of Statistics reveals the impact of inflation and cost variations on adjusted contract values. Three scenarios, each starting in different years (2018, 2020, and 2022), are explored to determine the sensitivity of the formulas to market fluctuations. Results show that by applying the eight adjustment formulas, only two formulas tend toward annual inflation. The indices used by the construction branch are not correlated with yearly inflation, and when no advance payments are granted, they offer a reliable basis for economic equilibrium in public contracting. The impact of inflation puts great pressure on works contracts, especially on adjustment formulas, for which it is necessary to carry out impact studies.