Rise and Fall Clauses in Australian Construction Supply: How to Check a Supplier's Escalation Claim Against ABS Indices

A supplier has sent an escalation claim under the rise and fall clause in your supply agreement: 9% on everything delivered since June, citing aluminium, steel or copper "up nearly 20%". You have a head contract that may or may not let you pass it on, and a project budget that does not have 9% in it. The claim might be right. Most of the time, when it is tested against the clause as written and the index it names, it is smaller.

This guide shows how to check a rise and fall claim in three passes: what the clause actually allows, which Australian Bureau of Statistics series measures the cost, and the arithmetic. The worked example uses real ABS readings for the June quarter 2026.

Last checked: 9 October 2026. This is commercial guidance, not legal advice. Whether a claim is payable under your agreement depends on its exact wording; take legal advice on the contract itself.

The Clause, Annotated

A model clause for supply of aluminium windows to a residential builder, with the reason each term matters.

1. The Contract Price is subject to rise and fall in accordance with this clause.
2. The index is the ABS Producer Price Index, Input to the House construction industry, Aluminium windows and doors, weighted average of six capital cities, series A2389829T.
3. The base index is the index for the quarter ending 31 December 2025.
4. The adjustment index for each delivery is the index for the quarter in which the delivery is made.
5. 70% of the price of each delivery is adjustable. 30% is fixed.
6. No adjustment is made unless the index has moved by more than 1% from the base index. Total adjustment may not exceed 10% of the Contract Price.
7. Adjustments apply to increases and decreases.

Term 2, the index

A named series, with its ID, removes the argument about which aluminium price counts. A world metal price is not this index, however relevant it looks.

Term 3, the base

Any movement before the base quarter is already in your price. A claim measured from an earlier, lower reading double counts.

Term 4, the adjustment period

Quarter of delivery, quarter of order and quarter of invoice give three different answers. Delivery is the common choice for supply; the clause must say which.

Term 5, the fixed portion

Labour already contracted, the supplier's overheads, margin, and materials not covered by the index do not move with it. The fixed portion is how a clause says so.

Term 6, the threshold and cap

A threshold stops small movements generating paperwork. A cap limits your exposure if the index runs.

Term 7, both directions

A clause that only moves up is a price increase with a formula attached. If the index falls, the price should fall.

Which ABS Series to Use

ABS Table 18 covers inputs to house construction by material class, published quarterly with an index number for each class (S2). For commercial and multi-residential work it is still the most specific free source for many materials; agree in writing that it is the reference, rather than assuming.

Scroll the table sideways to see every column

Source: ABS, Producer Price Indexes, Australia, June 2026, Table 18 (S2). Movements computed: for example, 166.6 / 158.5 less 1 = 5.1%.

Three timing facts matter for any clause built on these series. The June quarter 2026 figures were released on 31 July 2026, and the September quarter figures are due on 30 October 2026 (S1). So a delivery in August cannot be adjusted on its own quarter until the end of October. And the ABS has said that a full reweight of all producer price indexes will be published in the September quarter 2026 (S1). Record which release you read, and the date, alongside every figure you use.

The table also shows why a single headline is risky. Over the same twelve months, steel beams and sections fell 2.4% while electrical cable and conduit rose 16.3%. A supplier citing "materials up" has to say which.

How to Check the Claim: Six Steps

1. Find the clause and quote it. If there is none, stop here and treat the letter as a request to change the price, not a claim. The reply is different (see reply to a price increase letter Publication held).
2. Identify the index the clause names. If it names a series loosely ("the ABS index for building materials"), the most specific Table 18 class for the product is the fair reading, and it is the one to put in your reply.
3. Read the base and adjustment indices. Base: the quarter the clause names. Adjustment: the quarter of delivery, order or invoice, as the clause says. Movement = adjustment index / base index less 1.
4. Apply the threshold, the adjustable portion and the cap. Adjustment percentage = movement x adjustable portion, if the movement passes the threshold, up to the cap.
5. Apply it to the right value. Only the deliveries in the adjustment period, at contract prices, excluding any variations already priced at current rates.
6. Compare and reply. Set your figure beside the supplier's, show the readings and the series ID, and propose a true-up for any quarter not yet published.

A Worked Example

ABS, World Bank and exchange-rate readings are real, read on 9 October 2026; the contract, claim and clause are invented.

A Brisbane builder agreed a window supply contract worth $612,000 in January 2026, with the clause above. Windows worth $340,000 were delivered in the June quarter 2026, and $272,000 are scheduled for the September quarter. In August the supplier claims 9% on all deliveries, citing aluminium "up nearly 20% since December".

The supplier's figure is real but irrelevant to the clause. The World Bank's monthly aluminium price rose from 2,876 a tonne in December 2025 to 3,439 in June 2026, which is 3,439 / 2,876 less 1 = 19.6% (S3). That is the metal, in US dollars, not the index the contract names.

The September quarter. The index is not published until 30 October 2026. The fair approach is to invoice at contract prices and true up after publication, or to agree a provisional adjustment at the June quarter rate, 2.66% of $272,000 = $7,236, corrected when the figure appears.

Testing the supplier's own logic. Even on a raw-metal basis the claim does not reach 9%. If aluminium is about 35% of the window price, 35% x 19.6% = 6.9%. Converted to Australian dollars at the monthly averages (0.6643 in December 2025 and 0.7025 in June 2026), the metal rose from about $4,329 to $4,895 a tonne, or 13.1% (S3, S4), and 35% of that is 4.6%. Currency matters as much as the metal: see exchange rate price increase Publication held.

A base-period trap to watch for. Had the supplier measured from June 2025 (158.5) rather than the contract base, the movement would be 5.1% and the adjustment 3.58%. The contract base quarter is the one that counts.

The reply: accept $9,045 for the June quarter, with the calculation attached; propose a true-up for the September quarter after 30 October; and note that the clause adjusts downwards if the index falls.

Where the Claim Might Still Be Right

If the clause names a broader index, a larger adjustable portion or a later base, the supplier's number may be closer than this example. Some contracts adjust on quarter of order or invoice. And a supplier may have a separate case outside the clause, for a genuine cost the index does not capture; that is a negotiation, not an entitlement. The same method applies to steel, using the steel surcharge check Publication held, and to cable, using copper cable price increases Publication held.