Publishing of CIDA Bulletin of Construction Statics
If the project duration is too long, the initial estimation may not sufficient to recover the actual cost of contract. To address this problem CIDA has introduced a price adjustment method called “ICTAD formula method for adjustment to contract price due to fluctuation in prices” To use this procedure ,price variations compared to a base month which called as “indices”. These indices are identical to use anywhere in the country. The Procurement Guidelines (2006) states that the price fluctuation formula should be inserted in the bidding document as well as in the contract agreement for the Sri Lankan money for construction contracts which have more than 3 months’ duration.
The CIDA Bulletin of Construction Statics is published each month and for a year 12 Nos Bulletins are published. The price indices of 55 no’s construction materials (cement, sand, metal etc.), labour wages, plant hire rates and also cost indices of 11 categories were collected, checked and analyzed for this purpose. There are 55 categories of materials from M1 to M55, 3 categories of labour from L1 to L3, 2 categories of machineries of P1, P2 and fuel category of P3 published in the ICTAD PI bulletin. The in-house staff is engaged for analysis of data and the collection of prices in Colombo and suburb from Hardware shops[Steel, cement, blocks, asbestos products, clay products (bricks, calicuit tiles), sanitary ware, paints, Electrical items, sand, rubble, metal, etc.], Manufacturers (Aluminium products, ready mixed concrete, precast concrete, stainless steel, road metal, floor & wall tile, etc.), Contractors (Labour rates & plant hire rates), Suppliers [Fuel & bitumen (CPC), ductile iron, etc.].
CIDA had introduced two types of formulas for the calculation of price fluctuations of inputs in construction projects which is nationally accepted.
- The General Formula for projects more than Rs 10 Mn
- The Simplified Formula is for projects less than Rs 10 Mn
Mainly two assumptions were made when the formula was established, it should be considered as the inputs are evenly spread in the contract (Mel, 2013) and also the major cost was considered as 90 % of the project value and balance should be minor cost, i.e. the major cost recovered when the work items completed up to 40 % (CIDA, 2008). Latter assumption is based on the 80-20 concept of the construction economics. Also, it was assumed the payment for a price adjustment should be paid on a monthly cumulative basis as a part of the monthly interim payment application to the contractor. Formula method adjusts the price fluctuation based upon price indices at tender month and date of measurement. Price Adjustments will be made in accordance with the change in the Price Index (PI) of relevant resources within the contract period published by the responsible authority in the country. The Price Fluctuation Formula (PFF) will be determined by comparing the difference between the PI in effect for the base month and current month. Formula method is a partially reimbursement method.
It is obvious that cost of one construction input may not equal in different region in the country due to many reasons like adding of transport cost, scarcity, demand etc. The Indices published in this bulletin are used to calculate price fluctuations of inputs in construction projects by the clients, consultants and contractors. Division provides advisory services and clarifications regarding Bulletin and CIDA Price Fluctuation Formula.The Department of Census and Statistics uses CIDA Bulletin data for the National Accounts and the Central Bank of Sri Lanka prepare the indicators for construction Industry.