Construction Contract Material Escallation Clause Issues

[Bri Sawyer]

Has anyone run into issues with a contractor trying to enforce a material escalation clause in a construction contract? 

 We have a turn-key build contract in which there is a clause that allows the contractor to pass on any increases in material costs over 7.5% to us the buyer. The Clause in the contract specifically reads " Contract Price is subject to change if anyone material increases
in price by more than 7.5% (Seven- and One-Half Percent) from the date of this contract. Buyer/Owner shall be responsible for the cost of
any increase above 7.5% (seven and a half percent)." 

We received a call from the builder this week that in foundation and framing alone they are currently over budget by $111k and need a check within 7 days. Upon pushing them for invoices they decreased it to $87k but said more is coming once the framing is complete.  Totaling a nearly 75% increase over the original contract amount to this point. The foundation has been completed since May and there has been no mention of overages until this week. There was no warning prior to them completing the work. 

Our contract is from Oct 2021. Upon reviewing the invoices the line items in framing the change in the net price of specific items is less than 1% from the time of bid to the price paid due to falling lumber prices.  Which would indicate to me that the builder was negligent when completing his initial bid rather than the increase coming from material increases.  Secondly, our contract does not have an escalation clause relating to labor so I don't see think that should be passed on to us. 

Has anyone else had something similar happen? What type of documentation would be required to prove there was an actual increase in the material vs mistakes made on the contractor's part? I want to be fair but I'm having a hard time grasping such exorbitant increases when my other projects are experiencing drops in material prices from this time last year.