b'also, are plans for again doubling thisingyourselfagainstunanticipatedcost increases charged to you, without capacity during the next three years.price increases for materials.addition by you of overhead and profit They state that they forecast the fuelMost,ifnotall,ofthemajoron the cost increases. shortageandmadeprovisionforallmanufacturersofroofingmaterialsThe enclosed clause does not cover Certain-Teed fiber glass plants to havehave recentlyannouncedthatmater laborcosts.Youmustcontinueto aback-upsupplyoffuelbyaddingials will be billed at the price in effectanticipate labor cost increases in your extrashortagecapacityforpropaneat the time of shipment.bidsas in the past. gas.Inoneareaalone,theysecuredPrice protection and advance noticeTheChicagoRoofingContractors over 4,500,000 gallons.of price increases are out. This changeAssociation,in;onjunctionwiththe A steadyflowoffueliscriticaltocouldeasilyresultindisastrousChicagoRoofingIndustryPromotion fiberglassproduction,explainedafinancialconsequencestoyourFund, recently published an advertiseCertain-Teed representative.Ifa fuelbusiness. How do you figure materialmentinthelocalpapers,askingthe supplyisnotavailableconsistantly,costs in a bid you\'resubmitting nextforbearanceoftheircustomers, anditisnecessarytoquicklyshutMonday for ajob to be performed inarchitectsandgeneralcontractors downafurnace,thatfurnaceisfour months?duringtheenergycrisisandthe destroyedandmustbereplaced.ItIfyou fail to correctly estimate costmaterial shortages. The copy readas takesaboutaweektoshutdownaincreases in your bid, material costs atfollows: furnace properly and another week tothetimeofperformanceofthejob start production again.could result in a sizeable loss on that"OPEN LETTER TO ARCHITECTS GAF Corporation recently opened ajob.Ifyouover-estimatefuture cost-CONTRACTORS-new roofingmanufacturingfacilityinincreases for materials, you\'ll probably-BUILDING DEVELOPERS-MountVernon,Indiana,whichtheynever get the job as your bid will not be-PROPERTY OWNERS-statehasimprovedroofingfeltcompetitive.AND THE GENERAL PUBLICdeliveries.Thebestpossiblesolutionis E.L.Ostic, GAF; statedthattheir inclusion of a cost escalation clause inBetweentheenergycrisisandpollution price increases have been "cost justifi your proposal and the job contract. Ascontrols,theroofing industry is caught z"n a cation increases only." Waste paper foryouwillnote,inthesuggestedcostserious "crunch. \'\'the dry felts needed to make themanufactureoffeltsisbecomingescalationclausereprintedhere,theup ourroofing paperareacombinationof morescarceandthepricehasbeenclausecontemplatesmakingpricerags, and wood pulp and recycled paper. But increasing at an alarming -rate.adjustments only on asphalt (or pitch),many other industries need these products as "Theabilitytoproduceroofingfelt and insulation.well, i.e. newspapersandprinters- so-materials," said Ostic, "will be limitedThese materials generally comprisebeing needed badly by many- they are now to the availability of raw material andin excess of 90% of material costs for ain critically short supply. fuel."built-uproof.ThematerialcostThe saturants for these dry felts, tar, a by Currentpricesonfeltsareupitemization portion of theclausewillproduct ofcoalin thecokingprocess.and approximately25%fromsixmonthsfurnishyourcustomerwithspecificasphaltorbitumen.abyproductofthe ago, while as a general rule asphalt isinformation as to direct material costsdistillationofcrudeoil- hasbeenbadly upapproximately30to35%.Theseincluded in your proposal.curtailed by the stringent pollution controls. increases,oftenwithoutnoticefromThe costescalationclausemustbeandnowmademorecriticalbythenew somemanufacturers,hasmadeitincluded in the job contract. You shoulddemandsnecessaryinconnectionwiththe impossibleforroofingcontractorstoexplain how the clause operates to yourreductions of crude oil. providetheircustomerswithafirmcustomer,whethertheownerorAnd- the board form roof insulation used priceandatthesametimeprotectgeneralcontractor.Emphasizethatin our industry has been on allocation for the theirowninterests.without the clause, it will be impossiblepast six months. and now. for various reasons Consequently, many contractors arefor you to bidonthe job and explain- is ona more critical allotment basis.includingspecialclausesintheirwhy - that there is no way for you toSo-while. ands long as this situation for acontracts regarding price increases andreasonablyanticipatecostincreases;lasts, all of us- you people, and we roofing disclaiming liabilityfor delaysduetothat you don\'t want to lose your shirtcontractors.andoursuppliers- perhaps material shortages, fuel shortages andonthejobnordoyouwishthehavetodevelopenewmethodsforroof the inability to complete a job on timecustomer to pay more than he should.construction- acceptsubstitutions, duetootherdelays causedbyotherYou should also emphasize thatthe(carefully evaluated. and delaysor whatever tradesorbythegeneralcontractor,effectoftheclauseisnothingmore- weshallprevail- andperhapstowhoisplaguedbyhisownshortagethana dollarfor dollarpass-throughparaphrase Abraham Lincoln- "Thistooproblems.from you to your customer of materialshall pass." Contractors are cautioned not to give prices beyond a thirty day limit, clearlySuggested CostEscalationClause stating that it is an estimate only, with the firm contract prices to be quotedThe price herein stated is based upon prices (including freight) jor component materials in approximately two to four weeks prioreffect asof the dateof this proposal. as hereinafter itemized.If,atanytime priorto the to beginning the work.completion of performance of the work to be pe,fomied hereunder. any of said material prices Somecontractorsarebasingtheirshall be increased or decreased. then in respect of any of said work performed thereafter there pricesonflatpercentageincreaseinshall be a corresponding (dollar for dollar) increaseor decrease in the prices herein stated. each of the individual item prices usedI. ASPHALT (or PITCH)in calculating the estimate,pls theirb)price per roll$customary markup.Other contractorsa)quantity to be used tons are quoting progressive price increasesb)price per ton c)cost off elt$ by percentage, based on 30, 60, and 90i]in drums$3. INSULATIONperiods,etc.,onthetotalcontractir1in bulk$ price.a)quantity to be used squares c)cost of asphalt $b)priceTheMidwestRoofingContractors2. FELT per square$ Associationrecentlyreleasedthea)quantity to beusedc)cost of insulation$ following recommendations for protect- rolls ABC, January-February19747'