ALERT: Managing Tender and Contract Risks Amid Emerging Supply Chain Pressures
Friday 20 March 2026
Members are advised of emerging global supply chain conditions impacting the availability and cost of key materials across the plumbing and construction industries—particularly plastic pipe systems.
While the situation remains dynamic, these conditions have the potential to impact production schedules and material availability in the coming months.
Members are encouraged to learn more about the situation and take steps to review their tenders, contracts, and procurement strategies accordingly.
Situation
Recent escalation of conflict in the Middle East, together with associated security concerns affecting major shipping routes such as the Strait of Hormuz, is creating significant disruption across international shipping and energy markets. These developments are impacting the movement of critical petrochemical feedstocks, including naphtha and liquefied petroleum gas (LPG), which are essential for producing polymers such as polyethylene (PE), polyvinyl chloride (PVC), and polypropylene (PP).
As a result, global petrochemical markets are experiencing increased volatility, higher freight and logistics costs, and extended shipping lead times. Suppliers servicing the Australian pipe industry are already reporting:
- Increased input costs
- Reduced supply flexibility
- Longer lead times across a range of materials
Tenders
Where a tender has been submitted but not yet awarded
Options are limited; however, members may consider writing to the principal to:
- Request consideration of price escalation or material delay mechanisms
- Seek application of force majeure provisions in relation to material delays
- Request withdrawal of the tender
- Request the opportunity to revise the tender
Where a tender has already been awarded
The position will depend on the specific contract terms. Members should review whether the agreement includes:
- Rise and fall clauses
- Delay provisions
- Force majeure clauses
These provisions may provide relief, depending on how they are drafted.
Where a tender has not yet been submitted
Members have greater flexibility and should consider:
- Including clear qualifications and assumptions around pricing
- Limiting the validity period of tendered prices
- Requesting clauses to manage material delays and price increases
- Including provisional sums where appropriate
- Building contingency into pricing and project timelines to account for potential delays and cost fluctuations
Contract and Procurement Considerations
- Many contracts allocate material price risk to the contractor, which may not be negotiable
- Force majeure clauses do not always cover material shortages or delays and may not extend to global supply chain disruptions
- Freight costs and availability should be factored into pricing and planning
Force Majeure – Manufacturer Considerations
Manufacturers may only rely on force majeure provisions where such clauses exist within their contracts.
Members should note:
- Every force majeure clause differs, including the events covered and the processes required
- Assess whether supply chain disruption is captured under the clause
- Consider whether the clause applies equally to both parties or primarily benefits the manufacturer
- Understand notification and procedural requirements to rely on the clause
Existing Contracts – What Members Should Do
Members with current contracts in place should review agreements with a focus on:
- Price rise and fall provisions (including materials and freight)
- Variation clauses and what constitutes a valid variation
- Project timelines, delay provisions, and extension of time entitlements
- Notification requirements relating to delays, variations, and force majeure
Looking Ahead
To manage risk moving forward, members should:
- Avoid fixing prices where possible, or use provisional sums
- Limit tender acceptance periods (e.g. 7 days)
- Carefully manage supply and stock levels
- Explore suitable material substitutions where permitted
- Ensure all terms and conditions are thoroughly reviewed before entering contracts or submitting tenders
Final Reminder
Members are encouraged to closely monitor both their contractual obligations and supply chain position. Proactive planning, strong contract management and clear communication with clients and suppliers will be critical in navigating this period of uncertainty.
We recommend that members speak to a lawyer for advice related to contracts. MPAQ member can access up to 20 minutes free advice with Cornwalls and up to 30 minutes free advice with Helix Legal.