Difference between basic rate variation and rate escalation?

Question

Accepted Answer

Basic rate variation is due to changes in the scope of work, while rate escalation is due to inflation or market changes.

Basic rate variation occurs due to changes in the scope of work, such as additional work or changes in the design.
Rate escalation occurs due to inflation or market changes, such as an increase in the cost of materials or labor.
Basic rate variation is typically negotiated and agreed upon before the start of the project, while rate escalation may be included in the contract as a contingency.
Basic rate variation may require a change order to be issued, while rate escalation may be automatically applied based on a predetermined formula.
Examples of basic rate variation include changes in the size or complexity of the project, while examples of rate escalation include changes in the cost of steel or fuel.

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