Excessive Burden in Construction: How to Define the Rebalancing Trigger in the Tender |...

Understand how to define excessive burden in construction contracts, create rebalancing triggers in the tender, and integrate bands, the ABC Curve, price adjustment, and the risk matrix.

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Excessive burden in construction and engineering service contracts is not just any price increase or any reduction in the margin originally expected. It is a situation in which an extraordinary cost variation, associated with a legally relevant event and respecting the risk matrix, produces a global impact capable of making performance of the contract unviable as originally agreed. The practical difficulty is translating this legal idea into a measurable technical criterion before the problem appears.

Law No. 14,133/2021 preserves the right to restore the economic-financial balance in the face of unforeseeable events or foreseeable events with incalculable consequences, force majeure, fortuitous events, or acts of the sovereign. But the law does not establish a universal percentage for excessive burden. The TCU has also repeatedly stated that external control should not impose a single methodology for all contracts. For this reason, best practice is for the tender documents to define in advance the methodology, sources, variation bands, materiality, treatment of the ABC Curve, and the trigger that separates ordinary risk from an extraordinary event.

Excessive burden is not synonymous with a cost increase

The excessive-burden trigger needs to align with the risk matrix, rebalancing, and contractual rules. To place this decision within the complete control architecture, see What the TCU Reviews in Construction and Engineering Services Procurement.

Every engineering contract is exposed to market fluctuations. Steel, cement, fuel, equipment, freight, labor, exchange rates, and productivity do not remain constant during execution. Part of this variability is ordinary and should be absorbed through the normal price-adjustment mechanism and the contractor’s economic management.

Excessive burden operates on another level. To justify contract revision, it is not enough to demonstrate that an input became more expensive. A more complete technical and legal chain must be demonstrated:

existence of a legally valid triggering event;
unforeseeability or incalculable consequences;
extraordinary variation, not merely ordinary or seasonal;
causal link between the event and the alleged cost;
materiality of the exposure within the contract;
global impact sufficiently relevant to characterize excessive burden;
compatibility with the objective allocation of risks established in the contract;
absence of double compensation through price adjustment, contingency, insurance, or another mechanism already provided.

OT-IBR 009/2024 organizes the analysis exactly in this sequence: triggering event, extraordinary variation, and excessive burden. If one of these stages is not demonstrated, the claim should not advance to the final financial calculation.

Law 14,133 protects balance but does not provide a ready-made formula

The economic-financial equation arises at the time of contracting. It represents the relationship between obligations assumed by the contractor and remuneration offered by the Public Administration. Law No. 14,133/2021 allows consensual contract changes to restore this relationship when extraordinary events disrupt the economic basis originally agreed.

The central point is that the law works with broad legal categories. It does not state that an increase of 5%, 10%, or 20% is, by itself, sufficient to characterize imbalance. Nor does it require the trigger always to be a portion of BDI, operating margin, net profit, or the value of a particular input.

The absence of a universal percentage is not a gap that authorizes arbitrary decisions. It requires a methodology structured in advance.

TCU Decision 2,135/2023-Plenary consolidated a survey of several methodologies used by public bodies and entities for economic-financial rebalancing claims. The TCU recognized the diversity of existing solutions and did not turn one of them into a mandatory general rule for every procurement.

Why the trigger should be in the tender documents

When the tender documents do not define how the Public Administration will characterize excessive burden, the parties discover the methodology only after the dispute has already arisen. This increases transaction costs, legal uncertainty, and information asymmetry.

The contractor does not know which portion of volatility must be priced. The Public Administration does not know which documentation it will require. Inspection receives a claim without a clear contractual reference. Legal counsel needs to assess a methodology created after the fact. And the control body encounters a process in which the decision criterion may appear to have been built to justify the desired result.

Defining the trigger in advance produces four benefits:

improves bid pricing;
reduces generic risk premium;
delimits what belongs to ordinary risk;
makes later analysis reproducible and auditable.

OT-IBR 009/2024 is explicit: the Public Administration should establish in advance deadlines and frequency of claims, calculation criteria, the methodology for characterizing excessive burden, and the method for obtaining input costs.

Price adjustment, revision, and repricing are not the same thing

Confusion among these mechanisms is one of the main causes of technically weak claims.

Mechanism	What it addresses	Nature of variation	Typical basis
Price adjustment	periodic restoration of prices	ordinary and foreseeable	contractual index
Repricing	analytical variation of costs in services with predominance or exclusive dedication of labor	ordinary, linked to the real cost structure	worksheet and collective instruments
Revision / rebalancing	extraordinary disruption of the economic-financial equation	extraordinary and supervening	evidence of the event, causation, and global impact

Changing the price-adjustment index after an input spikes is not, by itself, a rebalancing method. OT-IBR 009/2024 warns that the contractual index remains responsible for ordinary restoration. Revision should isolate the extraordinary effect not absorbed by that mechanism.

Likewise, rebalancing should not be used to correct an originally unfeasible bid, a purchase made at the wrong time due to the contractor’s own fault, or a delay attributable to the private party.

The first filter is the risk matrix

Before discussing percentages, one question must be asked: who assumed this risk?

If the event is fully allocated to the contractor in qualitative and quantitative terms, the claim may be inadmissible. If it is allocated to the Public Administration, the analysis follows another logic. If risk is shared through bands, the first question becomes whether the observed condition exceeded the range assumed by the contractor.

The Risk Allocation Matrix in Engineering Contracts should align with the excessive-burden clause. A matrix that transfers risk without stating which ordinary variation is included merely shifts the controversy.

A more robust structure relates, for each risk:

event;
cause;
responsible party;
ordinary range assumed;
data source;
measurement period;
revision trigger;
minimum documentation;
calculation rule;
restoration mechanism.

Four families of triggers appear in practice

The TCU’s 2026 Cost Engineering Guide presents alternatives that may be combined according to the scope and maturity of the data.

Cost variation bands

The Public Administration defines a range within which input fluctuation remains ordinary risk. Once the band is exceeded, the possibility of revision analysis opens, without this meaning automatic payment.

This model gained relevance in TCU Decision 1,210/2024-Plenary, concerning highway contracts with bituminous materials. The TCU recommended that DNIT provide, in future procurements, acceptable cost-variation bands for these inputs, considering the representativeness of the materials in the project while preserving periodic price adjustment.

TCU Decision 1,267/2025-Plenary, when reviewing a motion for reconsideration, maintained the recommendation and only changed a deadline related to another determination in the proceeding. The discussion reinforced that bands are a preventive contract-design instrument, not a substitute for concrete impact analysis.

Impact on margin or BDI

Another family uses economic components of price formation as a materiality reference. The extraordinary impact may be compared with portions of BDI or with a reference margin defined in the base estimate.

This model requires caution because BDI is not synonymous with profit. Head-office overhead, insurance, guarantees, risk, financial expenses, taxes, and profit are different components. Using the entire BDI as the contractor’s economic “cushion” would be technically incorrect.

Impact on net profit

In certain decisions, the TCU used loss of estimated contract net profit as a reference. In TCU Decision 2,429/2024-Plenary, in the context of integrated contracting for FIOL, the Court stated that, in the absence of a contractual definition, excessive burden could be considered to arise when the contractor’s estimated net profit became negative, assessing the contract as a whole.

This precedent is relevant but should not be converted into a universal formula for every scope. It works better as evidence of the importance of not leaving the contract without a definition.

Contingencies and quantified risk matrix

When the risk matrix is quantified, the Public Administration can relate the trigger to exposure already priced. If a given risk was estimated and incorporated into the contractor’s contingency, part of its materialization is already covered. Revision should begin where what was originally assumed and remunerated ends.

This model avoids paying twice for the same risk.

There is no magic percentage for excessive burden

Fixed percentages are attractive because they simplify the decision. But the same percentage produces very different economic effects depending on contract structure.

Consider two BRL 100 million contracts:

in Contract A, the affected input represents 2% of the total amount;
in Contract B, the same input represents 35% of the total amount.

A 30% increase in that input produces very different gross impacts. In the first case, the increase corresponds to approximately BRL 600 thousand before other adjustments. In the second, approximately BRL 10.5 million.

The trigger should therefore consider representativeness, not merely percentage variation in the input price.

This is why the ABC Curve is so important.

The ABC Curve changes the materiality analysis

An extraordinary variation in a Class A item may alter the contract equation. The same percentage variation in an item with low economic relevance may be absorbed without threatening continuity.

OT-IBR 009/2024 requires, among the claim documents, a worksheet showing the variation of all inputs that are at least in Class A of the ABC Curve, including those that may offset the effects of items that increased.

This last point is decisive. Rebalancing should not look only at inputs that worsened. If certain material inputs had an extraordinary decrease, the global calculation needs to consider the offsetting effect where the applicable methodology so requires.

The article on ABC Curve in construction and estimates details the economic-concentration logic supporting this prioritization.

Extraordinary variation must be demonstrated against an ordinary reference

Saying that “steel rose 40%” still does not answer whether there was an extraordinary event. The price may have risen over a long period and tracked the contractual index. It may be a known seasonal fluctuation. It may reflect a supplier change. It may result from late procurement caused by delay attributable to the contractor.

The analysis should compare the observed evolution with the appropriate economic reference.

OT-IBR 009/2024 recommends:

historical series for the input;
deviation from the index representing ordinary variation;
a statistically representative period;
costs actually incurred for services already performed;
reliable reference sources for services not yet performed.

The objective is to identify the extraordinary portion, not simply update the price to current market value.

The triggering event should be separated from the disruption date

Another frequently overlooked point is that the triggering event and the date on which the contract becomes excessively burdensome may not coincide.

An international crisis may begin in January, produce price increases in February, affect purchases in March, and only in May cause the cumulative impact to exceed the contractual trigger.

OT-IBR 009/2024 distinguishes these milestones. The disruption date is the point at which excessive burden is characterized. From that date, if validated by the Public Administration and according to the applicable methodology, restoration may produce effects.

This time control prevents retroactive payment for periods in which the contractual equation still absorbed the variation.

How to design a variation band in the tender documents

A band needs to answer more than “up to 10% is the contractor’s risk.”

A technically useful clause should define:

which input or family of inputs is covered;
which price source will be used;
which base date will be considered;
which index represents ordinary variation;
which measurement frequency will be adopted;
which variation range is part of ordinary risk;
whether the band is symmetrical or asymmetrical and why;
minimum representativeness of the input in the contract;
how the ABC Curve enters the analysis;
how price adjustment will be deducted from the extraordinary effect;
which documentation will be required;
how the global impact will be calculated;
which event merely opens the analysis and which event effectively characterizes disruption.

The band does not need to be identical for every project. Bitumen-intensive highways, steel structures, electromechanical projects, and conventional buildings have different exposure profiles.

The band should not turn revision into disguised monthly price adjustment

There is an operational risk: creating very narrow bands and calculating price differences at short intervals may turn an extraordinary mechanism into continuous adjustment by input.

The TCU has already raised this concern when analyzing DNIT rules. Rebalancing should not function as a monthly unit-price update mechanism for every fluctuation. Revision depends on disruption of the global equation, not merely a momentary price difference.

The clause needs to avoid two extremes:

a band so narrow that any market noise generates a claim;
a band so wide that a truly extraordinary event can never reach the trigger.

TCU Decision 2,429/2024 and negative net profit

TCU Decision 2,429/2024-Plenary is especially important because it addressed a situation in which the risk matrix allocated certain risks to the private party, but the boundary conditions in the preliminary design could be materially inconsistent with reality.

The Court admitted that a substantial information error could, under certain conditions, support rebalancing if excessive burden were demonstrated. It also recommended that future risk matrices or regulations define the scope of the expression.

In the absence of such a definition, the decision pointed to the point at which the estimated net profit of the contract becomes negative as a possible reference, assessing the contract globally.

This reasoning offers two lessons:

risk allocation does not eliminate the obligation to provide minimally reliable boundary conditions;
if the Public Administration does not define the trigger in advance, the methodology may be built later under a higher level of controversy.

Negative margin should not be calculated from the company’s private accounting

If the contract uses profit or margin as a reference, the criterion needs to be auditable and equal for all bidders. It is not appropriate to depend exclusively on each bidder’s specific internal accounting, because this would make the same event produce different results merely because of corporate structure, tax planning, or business efficiency.

The TCU precedent works with estimated profit based on the Public Administration’s reference estimate, not simply the contractor’s private financial statements.

This preserves an objective basis common to competitors.

ABC Curve, margin, and band may be combined

A clause does not need to choose only one dimension.

A hybrid model may cumulatively require:

input variation above a defined band;
the item being in Class A or above a minimum representativeness threshold;
a proven extraordinary event;
net impact not absorbed by price adjustment;
global impact above a defined economic threshold;
compliance with the risk matrix.

The advantage is reducing false positives. The disadvantage is requiring a more sophisticated calculation memorandum. For high-value contracts, that complexity may be justified.

The claim should demonstrate the entire contract, not only the favorable item

One of the main differences between a technically structured claim and a price-difference worksheet is the global view.

The request should present:

updated contract and amendments;
triggering event;
causal link;
disruption date;
affected inputs;
historical series;
ABC Curve;
offsetting effects;
price adjustments already granted;
original discount;
invoices or other valid references;
remaining services;
updated schedule;
global financial impact.

Contractual Claims in Engineering and Claim Management further address the need for contemporaneous evidence and causal linkage.

A late claim weakens the demonstration

OT-IBR 009/2024 warns that a claim submitted long after the triggering event, without contemporaneous records, may indicate that the additional cost was bearable or that the contract remained executable under the terms originally agreed.

This does not, by itself, create an automatic rule of loss of rights in every situation. But it demonstrates the importance of event governance.

The contractor should notify the occurrence at the appropriate time. Inspection should record the event. The Public Administration should monitor its evolution. If the trigger is exceeded, the analysis will already have a reliable documentary history.

Claim Management in engineering projects performs precisely this function when structured from the outset.

Rebalancing cannot erase the original discount

When the winning bid offered an overall discount relative to the Public Administration’s estimate, restoration should not eliminate that economic differential.

OT-IBR 009/2024 recommends preserving the original discount. In other words, revision seeks to restore the equation, not reconstruct the contract as though the winning bid had never existed.

This is particularly important in procurements awarded by highest discount and in contracts where analytical unit prices are significantly below reference values.

The effect of price adjustment needs to be deducted

If the annual index has already restored part of the cost variation, paying the same portion again through revision would create duplication.

The claim needs to demonstrate what ordinary price adjustment absorbed and what remains extraordinary.

A conceptual way to express this is:

net extraordinary impact = relevant actual variation - portion absorbed by price adjustment - portion already covered by applicable risk/contingency

The actual formula will depend on the method adopted in the contract, but the logic of avoiding double recovery remains.

Example: Class C input with an 80% increase

Imagine an input representing 0.3% of the total contract value that experiences an extraordinary 80% increase.

The gross impact on the contract would be approximately 0.24% before considering price adjustment, discounts, actual quantities, and other offsets.

Even an impressive percentage increase may not produce global excessive burden.

This explains why the TCU Guide emphasizes the item’s economic relevance and why ABC Curve analysis should precede conclusions.

Example: Class A input with a 35% increase

Now consider a material representing 28% of the contract that experiences an extraordinary 35% increase.

The potential gross impact would be close to 9.8% of the contract value before other adjustments.

In this case, materiality is completely different. The claim deserves in-depth analysis of the triggering event, historical series, price adjustment, remaining services, and risk matrix.

The difference between the two examples shows why triggers based only on the percentage variation of an input are insufficient.

How to structure an excessive-burden clause

A mature clause can be divided into five layers.

Layer 1 — concept

Define what the contract means by ordinary variation, extraordinary variation, and excessive burden.

Layer 2 — materiality

Define which items will be monitored by ABC Curve, representativeness, or economic criticality.

Layer 3 — trigger

Establish bands, margin, index, or a combination of criteria that opens the revision analysis.

Layer 4 — evidence

List required documents, historical series, invoices, reference sources, and records.

Layer 5 — calculation and decision

Define how price adjustment will be deducted, how the global discount will be preserved, how impact will be calculated, and how the decision will be formalized.

This structure reduces room for ad hoc decisions.

Flow for analyzing excessive burden in engineering contracts

The trigger should open the analysis, not guarantee automatic payment

This distinction needs to be explicit.

Exceeding a price band may be a necessary condition for revision, but it is not sufficient. Causation, materiality, remaining contract balance, disruption date, documentation, risk matrix, and absence of duplication still need to be demonstrated.

The trigger is a methodological gateway. It is not an automatic check.

Integrated contracting requires additional care

Under integrated contracting, certain risks associated with solution development and design are assigned to the contractor. This does not mean that every error in boundary conditions or insufficient information automatically becomes a private risk.

TCU Decision 2,429/2024 demonstrates precisely that a risk matrix needs to coexist with the quality of the information provided in the preliminary design.

For integrated scopes, the tender documents should distinguish:

solution-development risk;
risk arising from technological freedom;
residual uncertainty assumed by the contractor;
substantial error in reference information;
boundary conditions outside the stated bands.

This separation reduces the risk that the expression “contractor risk” is used as an automatic answer to any occurrence.

Excessive burden and contingency need to be reconciled

If the estimate included contingency for a particular risk, the Public Administration needs to know which exposure has already been remunerated.

The Contingency Reserve in Engineering Projects should not be treated as a generic percentage. It derives from identified risks and the quantification methodology.

When the risk materializes, the excessive-burden analysis needs to verify:

which portion was anticipated;
which portion was within the ordinary band;
which portion exceeded the limit;
which portion was covered by price adjustment or insurance;
which residual portion actually disrupted the equation.

The tender documents should also provide for the inverse hypothesis

Economic-financial balance is a bilateral guarantee. If an extraordinary event substantially reduces costs in favor of the contractor and the applicable law and methodology indicate restoration, the Public Administration may be entitled to revision in its favor.

A clause designed only for cost increases risks being unjustifiably asymmetric.

This does not mean every band must necessarily be mathematically symmetrical. Asymmetry may be technically justified depending on risk distribution. The important point is that the logic be explicit and defensible.

The Public Administration should establish a review deadline

Claims without a review deadline remain open for months or years and affect measurements, cash flow, and continuity decisions.

The tender documents may establish:

deadline for initial notice;
update frequency;
minimum documentation;
deadline for curing deficiencies;
deadline for technical analysis;
decision point;
method for recording the undisputed portion;
procedure for reviewing the calculation memorandum.

These deadlines need to be realistic. A rebalancing analysis may require historical series, invoices, ABC Curve, supply contracts, and economic simulations.

Cost sources should be defined before the dispute

The discussion over which price is valid often arises too late.

The contract should establish a hierarchy of sources, for example:

invoices effectively linked to the project for services already performed;
official reference systems, where relevant;
sector indexes;
specialized public databases;
documented market research;
other technically justified sources.

The hierarchy may vary by input. Fuel, bituminous materials, steel, copper, and imported equipment have different market references.

A single invoice should not be used as absolute proof of the market

An invoice demonstrates a cost actually incurred, but it may also reflect a specific purchasing decision, volume, supplier, timing, freight, and commercial condition.

It is important evidence, especially for services already performed, but the Public Administration may need to compare the document with historical series and independent sources to validate exceptionality.

OT-IBR 009/2024 permits other sources when invoices are not possible, provided they are justified.

The technical opinion should reconstruct the equation

The final decision on the claim should not be merely “granted” or “denied.”

A robust engineering opinion demonstrates:

original condition;
allocated risk;
event that occurred;
market data;
time evolution;
affected materials;
remaining contract balance;
ABC Curve;
price adjustments granted;
net extraordinary impact;
applied trigger;
restoration amount;
schedule effects;
alternatives to restoration;
final recommendation.

The Engineering Technical Opinions service is especially suitable for this type of administrative record when the process is already at the decision stage.

Rebalancing is not always the only alternative

OT-IBR 009/2024 recommends evaluating scenarios. Depending on the case, it may be more economical to:

postpone a particular portion;
substitute a solution or material where technically admissible;
remove an item;
reschedule the program;
renegotiate scope within legal possibilities;
terminate the contract and procure again.

Revision should be compared with decision alternatives, especially when the impact is very high.

How Owner’s Engineering can act before and after the event

Before bidding, Owner’s Engineering can structure the risk matrix, define bands, select price sources, test stress scenarios, and incorporate the clause into the Terms of Reference and contract.

During execution, it can maintain event records, verify historical series, analyze the ABC Curve, review causation, recalculate impact, and prepare a technical memorandum for the Public Administration’s decision.

This is a typical case in which Owner’s Engineering functions as a technical-governance layer among design, estimate, contract, inspection, and economic decision-making.

Checklist for defining the trigger in the tender documents

Before publishing the tender, verify whether:

the risk matrix identifies material cost events;
the ABC Curve of inputs is available;
the contract distinguishes ordinary from extraordinary variation;
the price-adjustment index is consistent with the scope;
cost sources are hierarchized;
the base date is defined;
there is a band or another objective materiality criterion;
the trigger considers input representativeness;
there is a rule for deducting price adjustments already granted;
contingencies and insurance have been reconciled;
the global discount will be preserved;
minimum claim documentation is listed;
the notice period is defined;
analysis frequency is defined;
the disruption date has an identification method;
the clause makes clear that exceeding the trigger does not generate automatic payment;
the Public Administration may also revise the contract in its favor where applicable;
the process provides alternatives to financial revision.

Final considerations

Excessive burden is an economic category that needs to be translated into engineering and contractual criteria. Without that translation, the Public Administration discovers the analysis method only after a claim already exists.

There is no single percentage valid for every project. The definition depends on the risk matrix, input representativeness, ABC Curve, estimating methodology, price adjustment, contingency, and the contract’s economic profile.

The best tender does not promise that no controversy will occur. It defines in advance how the controversy will be measured.

Variation bands, margin criteria, profit analysis, a quantified matrix, and hybrid methodologies are all possible tools. What matters is that the choice be documented before bidding, applied equally, and connected to evidence of the triggering event, extraordinary variation, and global impact.

When the trigger is clear, rebalancing stops being improvised negotiation and becomes a reproducible technical procedure.

Technical references

[1] BRASIL. Lei nº 14.133, de 1º de abril de 2021. Lei de Licitações e Contratos Administrativos. Available at: [Planalto — Lei nº 14.133/2021](https://www.planalto.gov.br/ccivil_03/_ato2019-2022/2021/lei/l14133.htm).

[2] INSTITUTO BRASILEIRO DE AUDITORIA DE OBRAS PÚBLICAS. OT-IBR 009/2024 — Economic-Financial Rebalancing of Construction and Engineering Service Contracts. 1st ed., effective from Aug. 8, 2024. Available at: [Ibraop — OT-IBR 009/2024](https://www.ibraop.org.br/wp-content/uploads/2024/08/ORIENTACAO-TECNICA-REEQUILIBRIO-ECONOMICO-FINANCEIRO.pdf).

[3] TRIBUNAL DE CONTAS DA UNIÃO. Acórdão nº 2.135/2023-TCU-Plenário. Survey of economic-financial rebalancing methodologies in construction contracts. Available at: [TCU — Case-law search](https://pesquisa.apps.tcu.gov.br/).

[4] TRIBUNAL DE CONTAS DA UNIÃO. Acórdão nº 1.210/2024-TCU-Plenário. Acceptable cost-variation bands in highway contracts. Available at: [TCU — Acórdão 1.210/2024](https://pesquisa.apps.tcu.gov.br/doc/acordao-completo/1210/2024/Plen%C3%A1rio).

[5] TRIBUNAL DE CONTAS DA UNIÃO. Acórdão nº 1.267/2025-TCU-Plenário. Motion for reconsideration concerning rebalancing criteria in DNIT contracts. Available at: [TCU — Acórdão 1.267/2025](https://pesquisa.apps.tcu.gov.br/doc/acordao-completo/1267/2025/Plen%C3%A1rio).

[6] TRIBUNAL DE CONTAS DA UNIÃO. Acórdão nº 2.429/2024-TCU-Plenário. Integrated contracting, risk matrix, and characterization of excessive burden. Available at: [TCU — Acórdão 2.429/2024](https://pesquisa.apps.tcu.gov.br/doc/acordao-completo/2429/2024/Plen%C3%A1rio).

[7] TRIBUNAL DE CONTAS DA UNIÃO. Engenharia de Custos em Obras Públicas — Um guia de perguntas e respostas. Brasília: TCU, 2026. Available at: [TCU — Infrastructure and publications](https://portal.tcu.gov.br/infraestrutura).

Frequently asked questions

What is excessive burden in a construction contract?

It is the economic impact arising from an extraordinary event that disrupts the economic-financial equation and makes continuation of the contract excessively burdensome under the conditions originally agreed, subject to the risk matrix.

Is there a statutory percentage for excessive burden?

There is no universal percentage in Law 14,133. The methodology may use variation bands, margin, profit, contingency, or combinations, provided they are technically justified and consistent with the contract.

Does every extraordinary increase in an input generate rebalancing?

No. The triggering event, exceptionality, causation, materiality, global impact, compliance with the risk matrix, and absence of double compensation through price adjustment or other mechanisms need to be demonstrated.

What is the difference between price adjustment and rebalancing?

Price adjustment restores ordinary variations through an index and frequency established in the contract. Rebalancing or revision addresses an extraordinary disruption of the economic equation caused by legally relevant supervening events.

Can the tender documents establish a price-variation band?

Yes. The TCU has recommended bands in specific contexts, such as bituminous inputs. The band should consider the source, period, representativeness, price adjustment, and risk matrix.

Does exceeding the band generate automatic payment?

No. The band may open the analysis, but the other rebalancing requirements still need to be demonstrated and the net impact quantified.

Is negative net profit always the correct trigger?

No. TCU Decision 2,429/2024 used this reference in a specific context and in the absence of a contractual definition. The precedent itself reinforces the value of defining the applicable criterion in advance.

Why is the ABC Curve important in rebalancing?

Because it measures the economic relevance of inputs. An extreme increase in a low-representativeness item may not disrupt the equation, while a smaller variation in a Class A item may produce a material impact.

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