In recent years, a legal concept that was once more commonly found in manuals and contracts has taken center stage in discussions within the construction industry: contract rebalancing.
The Covid-19 pandemic, followed by the war in Ukraine, caused shocks to the global supply chain and led to significant increases in the prices of various construction inputs. Companies that had entered into contracts under normal conditions suddenly faced unpredictable or incalculable costs, reducing profit margins and, in many cases, resulting in substantial losses. At that point, the solution found was to resort to requests for economic–financial rebalancing, seeking to restore the contractual equation.
In simple terms, economic–financial balance can be defined as the proportional relationship between the obligations assumed by the contractor and the remuneration received from the Public Administration or the client.
This relationship, known as the economic–financial equation, must remain fair and stable throughout the entire execution of the contract.
Economic–financial imbalance, in turn, occurs when external factors alter this equation, making the performance of contractual obligations excessively burdensome. Statutory law, legal doctrine, and technical standards indicate that this may result from fortuitous events, force majeure, acts of the government (fait du prince), or even abnormal variations in the prices of inputs that exceed the indices contractually foreseen, among other factors.
In the administrative sphere, the preservation of economic–financial balance is grounded in Article 37, XXI, of the Federal Constitution, which ensures that the effective conditions of the proposal are maintained throughout the execution of the contract.
At the statutory level, both the Civil Code (Articles 478 to 480) and public procurement legislation regulate the matter. Former Law No. 8,666/93 already provided, in Article 65, II, “d”, for the possibility of contractual revision in the event of unforeseeable events, force majeure, fortuitous events, or acts of the government, whenever such events rendered the performance of obligations excessively onerous.
Current Law No. 14,133/21 not only maintains this protection but also introduced an innovation by requiring, where applicable, the inclusion of a risk matrix as a contractual clause (Article 92, IX). This instrument allocates responsibilities between the parties and defines in advance the risks that may affect performance, serving as an objective parameter for restoring the balance when necessary.
Similarly, Law No. 13,303/2016 (the State-Owned Enterprises Law) reinforces this logic. Article 42, X, defines the risk matrix as a contractual clause that delineates the risks and responsibilities of both parties, and it is likewise responsible for characterizing the contract’s initial economic–financial balance.
Whenever a risk materializes and causes losses to one of the parties, room is created for compensation, ensuring the continuity of performance without compromising the contract’s viability. Everything depends, of course, on how the claim is presented to the counterparty.
By way of reflection, the proper treatment of these impacts largely depends on the practice of contract administration. As previously discussed, it is through contract administration that systematic monitoring of performance is ensured, relevant events are recorded, and the technical documentation necessary to substantiate potential rebalancing claims is produced. Without this continuous monitoring, proof of the imbalance may become fragile and susceptible to prolonged disputes. Contract administration thus functions as the practical link between the legal guarantee of maintaining the economic–financial balance of contracts and its effective application in engineering and construction contracts.
Economic–financial rebalancing is not a privilege granted to the contractor, but rather an instrument for preserving the contract itself, allowing the project or service to be completed under the conditions originally agreed upon.
In the current scenario, understanding and properly applying economic–financial rebalancing is more than a legal requirement—it is a tool for efficient management and for protecting investments.
