Using NEC3 - Option A, with secondary option X1 (Price Adjustment for Inflation).
Is it possible for the listed indices in the contract to reduce and make the PAF a negative number? In times of deflation, could a Contractor on a Lump Sum Option A submit their payment application and have it multiplied by a negative PAF ((L-B)/B) in effect having their payment application amount reduced ? If only one indices were listed in the contract for fuel and the Contractor priced at tender based on fuel being $80 barrel, if this dropped significantly part way through the contract to $40. Say the indices for fuel PAF would be ((0.4-0.8)/0.8) = -0.5. In this scenario the contractor would not achieve the contract Total of the Prices at Completion. (numbers made up for ease) - assume it’s possible to get a negative PAF. Option X1 makes no mention of a reduction in the Prices, or is this just assumed to be part of it i.e. X1 could lift/reduce prices ?
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