When assessing the change to the prices due to a compensation event, the contractor will be entitled to recover the extra over defined cost the contractor would not otherwise have incurred but for the compensation event.
Defined cost is defined in clause 11.2(6). For those elements of defined cost determined using rates stated in contract data part two, for example rates for people undertaking design outside of the working areas or rates for equipment, these will not be subject to inflation as the rates are fixed for the duration of the contract.
For those elements of defined cost determined using actual cost, for example amounts paid by the contractor to a subcontractor, this will reflect the actual cost that the contractor has or will pay to the subcontractor per the terms of that subcontract. This may therefore include the effect of inflation.