29 April 2026
3 min read
#Construction, Infrastructure & Projects
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On 20 April 2026, the Fair Work Commission’s Expert Panel made the Road Transport Contractual Chain Order – Fuel Cost Recovery – 2026 (RTCCO) in response to rising fuel prices driven by the conflict in the Middle East. We provide an overview of the RTCCO and its general application in our earlier article here.
This article looks at how the RTCCO impacts principals and contractors in the construction industry, and outlines steps to manage fuel-related issues in contracts.
The broad application of the RTCCO means that both principals and contractors may be captured within road transport contractual chains, though its application to a particular party will depend on the specific procurement structure of the project and relevant contracts.
For construction projects, the practical significance of the RTCCO is that qualifying fuel cost increases for road transport work must be passed through existing contractual chains, even where head contracts and subcontracts were not originally drafted with this adjustment in mind. This is an important consideration for both principals and contractors, particularly on projects that depend on the transport of substantial quantities of materials.
Even where head contracts do not expressly allow broader cost escalation, the RTCCO may still require principals within a road transport contractual chain to adjust rates paid for road transport work, so that increased fuel costs can be recovered by downstream parties. This is likely to manifest itself in progress claims and variation claims.
In anticipation of, or in response to a claim for escalated fuel costs, principals should identify which road transport contractual chains they are a part of, distinguish between fuel cost increases attributable to road transport work and those arising from general construction activities, and ensure that contractors substantiate their claims with appropriate evidence. These activities would benefit from early engagement with contractors. Given that fuel costs are often embedded silently in contract pricing rather than identified as a discrete line item, assessment can be genuinely challenging. Engaging a quantity surveyor to review claim documentation may assist in this process.
If a contractor proposes a broader relief package, principals should approach it commercially and pragmatically to preserve project delivery and outcomes. Any agreed relief should be formally documented to protect against any claims that contractual rights have been inadvertently waived or varied.
For contractors, the RTCCO may provide a pathway to recover qualifying fuel-related increases in transport costs, easing pressure on already tight margins. However, the relief available under the RTCCO is limited as it only applies to fuel used in the performance of road transport work. Fuel consumed by on-site plant and machinery is not covered by the RTCCO and remains subject to the contract terms agreed prior to the current period of fuel price volatility.
Contractors may consider proposing an overall relief package to principals which covers fuel cost increases arising from both road transport work and construction work, rather than relying solely on the entitlements the RTCCO provides. Contractors are likely to achieve a better outcome by engaging early and transparently with principals, rather than first raising increased fuel costs in progress claims or variation claims.
Given the limited scope of the RTCCO, contractors must keep contemporaneous records, including by managing downstream claims, so that any claims under the head contract can be properly substantiated.
Regardless of your position in a construction or infrastructure project, the priority should be to engage in an early and well-informed conversation about how fuel cost increases will be identified, evidenced and managed across the project chain. This conversation should not be limited to transport costs. Project participants should also consider the impact of fuel price volatility on project delivery as a whole. Parties who get ahead of these issues now will be better placed to avoid disputes and protect margins and project delivery as fuel price volatility continues.
If you have questions about the RTCCO or need assistance with reviewing your construction contracts, please contact us here.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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