NEC3 ECS Opt A - X1 Price Adjustment for Inflation

Hi all,

Can someone please explain if the below is correct, as I’m a bit confused on the NEC3 wording. It reads: “(a) The Base Date Index (B) is the latest available index before the base date”. However on the contract, it defines a base date of April 23 (Say the index at April 23 is 100).

When we make an application, would we use April 23 index as the base date or March 23 index (As it’s the latest available index before the base date)?

My understanding on how PAF is calculated:

(a) The Base Date Index – April 23 (Using the index at April 23, as above say it’s 100).
(b) The latest available index before date of assessment - We make an application on 23rd Nov 23, so we use updated Nov 23 indices (Say its 110).
(c) Price Adjustment Factor – (b - a) / a = % uplift or (110 - 100) / 100 = 10% uplift on applicable works complete in Nov 23.

Any help would be really appreciated.

Thanks in advance.

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@Vaco, here’s my views on your queries.

  1. The base date is a date not a month, therefore I cannot imagine that the it is stated in SCD Part one as “April 23” - it should be a proper date.

  2. If I’m correct on the above, you either choose March 2023 or April 2023 index, whichever is before the base date, which will now be the Base Date Index (B).

  3. You would then apply the PAF (which you calculated correctly) to the change in the PWDD since the date of the last assessment, and add it to the amount of the previous price adjustment plus any correcting amounts (see the 3 bullet points under X1.4).

  4. It follows that the previous amount due paid will be deducted in the end, so there is no double dipping.

I hope that makes sense.


Thanks Peter. All of that makes sense apart from the below, if you could please provide guidance on.

Apologies, you were correct, my error on typing. The base date in the contract is 1st April 2023.

  1. In this case, if the base date is 1st April 2023, the latest available index before the base date would be 31st March 2023. So we would use March 23 as the Base Date Index? Alternatively, if the base date was 30th April 2023, the base date index would be April 2023?

Thanks in advance.

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Yes, I would agree with your logic; it is the latest available index “before” the base date.

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Thanks for your help & guidance Peter - Much appreciated.

My pleasure, take care.