X1 Base Date. First assessment immediately after base date has a Price adjustment

NEC3 and NEC4 Contracts Contract Data
1

X1.1

(a) The Base Date Index (B) is the latest available index before the base date.

(b) The Latest Index (L) is the latest available index before the date of assessment of an amount due.

I would like to understand how this actually works.

Commonly, the indices used are the ones published by BCIS. These indices are published each month between the 21st and the 28th, depending on the year. When these are published (monthly), the latest available indices refer to the month before the index is published. If we take the following example:

Say the base date is 1 August 2023. The latest update of the indices before the base date was the one published on 25 July 2023, and the latest available indices are the ones of June 2023. Say the first assessment of this project happens on 28 February 2024. By this time, you already have the indices of January 2024 as the latest publication happened on 20 February 2024.

What is the Base Date Index (B)? Is it July 2023 as the index is now available? Or is it June 2023, which was the latest available index before the base date? I think it is the latter.
What is clear is that the Latest Index (L) in this scenario is the one referring to January 2024, and that is the one you use as L for the Price Adjustment of the February 2024 amount due.

It may be easier to understand the above, if with the same information above, we change the scenario and consider that the first assessment happens on 25 August 2023. Then, at the time of the assessment, the latest publication would have been the one on 22 August 2023, which contained the indices of July 2023. Then clearly, L would be the index for the month of July 2023, and B would be the index referring to June 2023; otherwise, your PAF would be 0. The point I would like to probe is that even the first assessment happening immediately after the base date will be subject to a Price adjustment.

Could anyone advise if this rationale is right?

Thanks in advance.

2

Hi

the base date should be identified in the Contract Data Part One. Using your example the Base Date Index is June 23

3

Many thanks, Dave, for the reply to my query. This confirms what I wanted to prove.

I have checked other queries regarding X1 and the Base Date Index (B) this morning and read a response from Neil Earnshaw from April 2017, in which he used something in his explanation that I consider very useful and simple to understand the whole rationale. He explained that the Base Date Index (B) is “the last value of the index published at that point in time.”

Considering this, I think that an amendment to bullet point (a) should be considered in order to clarify what is meant by the “latest available index before the base date,” which is the latest available index before the “base date” published at that point in time. The confusion arises because, in most cases, the latest available index before the base date changes when the indices are updated the following month.

I leave this with the panel but I think it should be considered something as (in bold the addition)

(a) The Base Date Index (B) is the latest available index before the base date at that point in time.