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According to the statistics made by Directorate-General of Budget, Accounting and Statistics, Executive Yuan, the Construction Cost Index (CCI)-General Index (yearly index) has continued to rise, from 77.52 in 2002 to 124.25 in 2008. During the 6 years, the extent of construction price increase has amounted to 60.3%. The fluctuation range is quite large. However, regarding the allocation of price fluctuation risks stipulated in public construction contracts, the competent authority and the construction industry have failed to reach a consensus all the time. Thus, from 2004 to 2009, the number of lawsuits regarding price adjustment disputes has increased year by year, amounting to 211 cases. Besides, in this study, the court verdicts in lawsuits regarding price inflation disputes had been collected, for gathering statistics. The findings showed that contractors’ loss amount (namely the amount of subsidies requested by contractors) incurred by price fluctuation has accounted for 8.09% of total contract sum averagely. What’s more, according to the statistics made by Directorate-General of Budget, Accounting and Statistics, Executive Yuan, the construction industry had the average profit rate of 7.57% in contracted construction in 2006, but such a rate decreased to be merely 2.28% in 2001. Thus it can be seen that the loss possibly caused by price fluctuation risks has averagely surpassed the contracted benefits earned by contractors. Therefore, whether risk liability has been allocated reasonably or not and why both public and private sectors have controversy for many years but have still failed to find a balancing point, were the issues this study intends to explore.
Based on the aforementioned background and motivation, the main content of this study included the arrangement and compilation of various kinds of legal opinions occurred in different remedy means such as mediation, arbitration and litigation, regarding price adjustment disputes. Also, the explorations were made, aimed at what the conflicts in attitudes and approaches would show when both parties in a contract encountered price adjustment disputes, due to their different stances. Such conflicts have caused the disputes come to a deadlock for many years, still unable to be solved effectively. Then, aimed at the laws and decrees related to price adjustment, the suggestions for amendments were proposed, for making the stipulations related to price adjustment meet real needs in practice. Thus, both parties in a contract can get reasonable allocation of price fluctuation risks. The findings in this study indicated that contractors are usually in disadvantaged situations during price adjustment disputes. First of all, in terms of mediation, contractors may have high possibility of seeking mediation. Also, in such mediation, the extent of the chance for contractors to obtain compensation is determined depending on whether the contracts have stipulations regarding the situations of price adjustment or not. Thus, contractors may have approximately 50% of possibility to get the chance of obtaining compensation by means of mediation. Even so, however, the problem lies in: Among public construction contracts, the cases allowing for price adjustment are still very few. Therefore, in fact, contractors still get lower compensation obtained via mediation. Furthermore, in terms of arbitration means, previous arbitration cases indicated: As long as contractors could prove price inflation, they would get greater chance to obtain compensation by means of arbitration. However, in practice, it is hard for contractors to get the chance of arbitration actually, due to the mechanism “Mediation First, Arbitration Later” designed in the 1st paragraph, Article 85, Procurement Act. Thus, contractors also have lower chance of obtaining compensation by means of arbitration. Finally, in terms of the means of litigation, naturally, contractors can enter lawsuit procedures as long as a prosecution is brought. However, as for the judges’ opinions in previous judgments regarding price adjustment disputes, most of such opinions were against contractors. Therefore, contractors also have lower chance of obtaining compensation through this way. To sum up the three means mentioned above, the findings showed: As a whole, under the dispute resolution approaches provided by the existing laws and decrees, contractors are situated at relatively-disadvantaged positions obviously. However, in practice, the risks of price inflation are mostly the ones that cannot be prevented and controlled by contractors themselves. Therefore, this study was of the opinion that the existing mechanism for handling price adjustment is unfair to contractors. Aimed at the issues regarding the principle of price adjustment handling and the existence of dispute resolution mechanism, the suggestions in this study were: (1) The level of laws and decrees for the existing principle of price adjustment handling should be enhanced, while the binding force on the construction project administrations should be strengthened, in order to carry out the reasonable allocation of price fluctuation risks in contracts; (2) As for whether price variation should be applied to the adjustment in adding or reducing construction payment, regarding the suggestions for the existing price dispute resolution mechanism, the emphasis is that the judgment standard should be based on “whether such a price fluctuation can be foreseen by contractors and then the risks of loss can be controlled”.
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