General Price Variation : Civil Construction Project Part-2

 

GENERAL PRICE VARIATION CLAUSES
Adjustment for variation in prices of materials (other than Steel and Cement), labour fuel, explosives, detonators shall be determined in the manner prescribed below :-
The percentage component of various items in contract on which variations in prices shall be admissible shall be as below:
Tunneling contract Ballast and Quarry products contracts Earthwork contracts Other works contracts
Labour component. 45% 55% 50% 30%
Other Material component 5% 15% 15% 25%
Fuel Component 15% 15% 20% 15%
Explosive Component 15% 15% 20% 15%
Detonators Component 5%
Fixed component. 15% 15% 15% 30%
* No escalation is payable on fixed component.
NOTE
If in any case, the accepted offer includes some specified payment to be made to consultants or some materials supplied by Railway at fixed rate, such payments should be excluded from the gross value of the work for purpose of payment/ recovery of variations.
The amount of variation in prices in the several components (labour materials etc.) other than steel & Cement  shall be worked out by the following formulas.
L – R x ( I – Io ) X  P
             Io              100
M – R x ( W – Wo ) X  Q
             Wo                   100
U – R x ( F – Fo ) X  Z
             Fo              100
X – R x ( E – Eo ) X  S
             Eo              100
N – R x ( D – Do ) X  T
             D0              100
L – Amount of price variation in labour.
M – Amount of price variation in materials.
U – Amount of price variation in fuel.
X – Amount of price variation in explosives.
N – Amount of price variation in detonators.
R- Gross value of the work done by the contractors as per on account bill(s) excluding the cost of materials supplied by railway at fixed price. This will also exclude specific payment. If any, to be made to the consultants engaged by the contractor’s (such payment will be indicated in the contractor/s offer)
Io – Consumer price index number for industrial workers – all India Published in R B I. Bulletin for the first month for quarter under consideration .
I –   Consumer price index number for industrial workers – all Indian Published in R B I. Bulletin for the first month for quarter under consideration.
Wo – Index Number of whole sale prices –By groups and sub-groups All commodities – as published in the R. B. I. Bulletin for the base period.
W  – Index number of whole sale prices – By groups and sub-groups.  All commodities – as published in the R. B. I. Bulletin for the first month of the quarter under consideration.
Fo – Index number of whole sale prices –By groups and sub-groups for fuel, power, tight and lubricants as published in the R. B. I. Bulletin for the base period.
F-  Index number of whole sale prices – By groups and sub-groups for fuel, power, light and lubricants as published in the R. B. I. Bulletin for the first month of the quarter under consideration.
Eo – Cost of explosive as fixed by DGS&D in the relevant rate contract of the firm from whom purchase of explosives are made by the contractor for the base period.
E – Cost of explosive as fixed by DGS&D in the relevant rate contract of the firm from whom purchase of explosives are made by the contractor for the first month of the quarter under consideration.
Do- Cost of Detonators as fixed by DGS&D in the relevant rate contract of the firm from whom purchase of detonators are made by the contractor for the base .
D-  Cost of Detonators as fixed by DGS&D in the relevant rate contract of the firm from whom purchase of detonators are made by the contractor for the first month of the quarter under consideration.
P – %age of labour component.
Q – %age of materials component.
Z – %age of fuel component.
S – %age of Explosives component.
T  – %age of detonators component.
The index number for the base period will be the index as obtained for the month of opening of tender and the quarters will commence from the month. If the rate quoted in negotiated tender are accepted, the base month for the PVC will be month in which negotiation are held..
The weightage shall be applied on the value arrived after deducting the cost of steel and cement from the total value
The price variation implies both increase as well decrease in input prices and therefore, price variation during the currency of the contract may result in extra payment or recovery, as the case may be.
PRICE VARIATION CLAUSE FOR STEEL AND CEMENT
The prices of steel and cement shall be linked with Whole Sale Price Index of the respective sub group as per RBI index Numbers. The formula for calculating the amount of variation on account of variations in prices of steel and cement shall be as indicated below:
Ms= Rs x (W/s-Wso)/Wso
                Wso
Mc= Rc x (W/c-Wco)/Wco
                Wco
Where:- Ms= Amount of price variation in material (steel)
Mc= Amount of price variation in material (cement)
Rc or Rs = Value of cement or steel  supplied by contractor as per on account bill in the quarter under consideration.
Wso= Index No. of Wholesale Price of subgroup (of steel and Iron) as published in RBI Bulletin for the base period.
Ws= Index No. of wholesale price of subgroup (of steel & Iron) as published in RBI Bulletin for the first month of the quarter under consideration.
Wco= Index No. of wholesale price of sub group (of cement) as published in RBI Bulletin for the base period.
W/c= Index No. of wholesale price of sub group (of cement) as published in RBI bulletin for the first month of the quarter under consideration.
NOTE- Item No. NS/ D-1 & NS/D-5 under schedule D will be considered for price variation of steel and item No. NS/C-1(a) & NS/C-1 (b) of schedule C will be considered for price variation of cement. Other items not mentioned here will be governed by clause No. 68.1 of General variation clause even if involving element of cement and steel.
The adjustment for variation in prices, if required, shall be made once every quarter in the on account payments, if more than one on account payment is made to the contractor in quarter the adjustment, if required shall be made in each bill.
Price variation clause shall not apply if the price variation is upto 5% reimbursement/recovery due to variation of prices shall be made only for the amount in excess of 5% of the amount payable to the contractor.
Total amount of reimbursement/recovery due to variation in prices of the several components shall be limited to 10% (i.e. 15% – 5%  floor price) of the amount finally payable to contractor for the contracts of duration between 1 to 2 years and 20% ( 25% -5% floor price) of the amount finally payable for contract of more than 2 years duration.
Material supplied free of cost by Railway to the contractor shall fall out side of preview of the price variation clause.
The price variation is payable/recoverable during the original completion period as specified in the contract agreement and also extended period of the contract if the extension has been granted on administrative ground under clause 17 A (i), (ii) & (iii) of general conditions of contract. No price variation shall be payable /recoverable for all extension of time granted under clause 17 B of general conditions of contract.
There will be no change in other provisions contained in
Board’s letter No. 80/W1/CT/10 dated 25.04.1980, No. 85/W1/CT/7 dated 20.01.87 and No. 85/W1/CT/7 dated 04.04.1996 will apply.
The price indices shall be taken on all India basis from RBI bulletin. In case latest RBI bulletin is not available provisional, indices made available by the reserve Bank of India may be adopted. Final adjustment if any may be made on the basis of finally published RBI indices.
The price variation implies both increase as well as decrease in input prices and therefore, price variation during the currency of the contract may result in extra payment or recovery, as the case may be.
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