Hi,
I am trying to work out the PAF according to the contract condition as follows:
The proportion used to calculate the Price Adjustment Factor are
0. 20 linked to the index for 4/CE/EL/01 Electrical Engineering Labour
0. 15 linked to the index for 4/CE/EL/02 Electrical Engineering Materials
0. 20 linked to the index for 4/CE/ME/01 Mechanical Engineering Labour
0. 15 linked to the index for 4/CE/ME/02 Mechanical Engineering Materials
0. 10 linked to the index for 4/CE/01 Civil Engineering Labour
0. 10 linked to the index for 4/CE/02 Management and Administration
0. 10 non-adjustable
I have managed to work out the following:
i am not sure however how to calculate the factor for non adjustable 10% - do i keep the base rate at 100 and the current month indexation rate at 100? any help would be appreciated.
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Assuming this is an ECC form, the calculation should be (L-B)/B. B is the Base Date Index, so Jan 2020 in your case and L is the Latest Index, so is June 2021. This calculation is applied to each of the indices and then multiplied by the relevant proportion, as follows;
4/CE/EL/01 (115.8-115.2)/115.2 x 0.20 = 0.10%
4/CE/EL/02 (111.5-105.4)/105.4 x 0.15 = 0.87%
4/CE/ME/01 (114.2-113.9)/113.9 x 0.20 = 0.05%
4/CE/ME/02 (125.1-113.1)/113.1 x 0.15 = 1.59%
etc
The ‘products’ (resulting percentages) are added together to give the Price Adjustment Factor. In your case this totals 2.73%.
The ‘non-adjustable’ element would have an index of 100 which would never change so this would always equate to 0.00%, which means that 10% of the PWDD would not be adjusted.
How the PAF is applied depends on what main option you have.
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Thank you Andrew, this actually agrees with my calcs
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Do the PAF Calculations apply retrospectively to the total value of works done to date?
For example the overall indices adjustment gives a change of 3%, the total value of works is £100, does that mean the total value become £103?
Please, what is the weighting in the spreadsheet?
Thank you.
Hi Andrew,
Just to clarify. In the above calculation - does the base (B on the formula) stays the same year on year or so we change it each year so effectively L for year 1 becomes B for year 2 and so on? When calculating price adjustment yearly….
Just to clarify - the contract states that the base rate for indices is Jan 2020
Thanks,
Violetta