Cabinet Relaxes K-Value Criteria to Aid State Project Contractors Amid High Energy Costs
The Cabinet approved relief measures for state contractors facing high energy and material costs, temporarily relaxing K-value adjustment thresholds on construction contracts to ease financial pressures from the Middle East conflict's impac
Government spokesperson Ratchada Thanadirek announced that the Cabinet meeting on May 19, 2026 approved relief measures for state contractors affected by the Middle East conflict, as proposed by the Budget Bureau. The measures aim to reduce cost burdens and maintain liquidity amid rising energy prices, transportation costs, and material expenses, particularly for construction contractors, state procurement vendors, and SMEs with limited working capital. Continued cost pressures could impact project delivery, employment, and local economic activity. The relief package includes a temporary relaxation of the K-value calculation method for price-adjustment construction contracts, reducing the adjustment rate from ±4% to ±2% for contracts delivering work phases between February 28 and September 30, 2025, and using price indices from the month of government price approval instead of the bid opening month. The K-value is a mechanism that calculates compensation for cost changes during project implementation, such as fuel, construction materials, and energy expenses. When costs exceed the set threshold, the government reimburses contractors; when costs decrease, reimbursements are reduced. This measure was previously used during the subprime financial crisis and is expected to benefit all groups by maintaining business liquidity, sustaining employment, and supporting consumer purchasing power to drive economic growth.
