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GC-64
 
PRICE ESCALATIONS/ADJUSTMENTS
 
The Contractor and the NIA shall be entitled to payment of price escalations and adjustments, respectively, if during the effectivity of the Contract, prices of construction materials and supplies and labor used in the Contract Work increases or decreases by act of the Government.

Materials and supplies furnished by NIA including those materials and supplies purchased, and those items of work accomplished using the Advance Payment provided by NIA, (if any), under this Contract will not be considered for price escalations.

Price escalations/adjustments for each and every applicable item of work will only be considered for payment when:

    1. The increase in the Contract unit price for any applicable item is more than 5% of the original contract unit price in which case, only the equivalent amount corresponding to the percentage increase in excess of 5% of the original Contract unit price will be paid to the Contractor as shown in the parametric formula (Eq. 1) under 6 hereof.
The decrease in the Contract unit price for any applicable item is more than % of the original Contract unit price in which case only the equivalent amount corresponding to the percentage decrease in excess of 5% as shown in the parametric formula (Eq. 2) under 6 hereof will be used as the basis for computing the corresponding amount to be deducted from the Contractor's collection. No price escalation/adjustment shall be effected when the fluctuation factor (K) as computed with the use of parametric formula (Eq. 3) under 6 hereof falls in thÐe range from 0.95 to 1.05.

Calculations and payments for price escalations/adjustments shall be governed by the following guidelines:

1. Price escalations/adjustments shall be reckoned from the month of bidding of the project but shall not be calculated and paid for earlier than six months after the date of bidding. (Calculation and payment is postponed six months after month of bidding).

2. Calculation and payment for price escalations/adjustments shall be allowed for every progress billing.

3. For construction and related materials under government controlled prices, the computation of price escalation shall be reckoned from the actual date of bidding of the project.

4. Payment for price escalation of work accomplished within the period shall be based on actual escalation amount computed in accordance with appropriate indices provided for in the formulae under this Article or as expressly stipulated in the Contract.
 
5. In case the Contract Work is behind schedule by more than 5% on the date when computation of price escalation/adjustment is scheduled, computation of price escalation/adjustment on such portion of work that should have been (but was not actually) accomplished within the period (in accordance with the approved firmed-up construction program) shall be reckoned on the basis of escalation rate applicable during the period it should have been accomplished. However, payment of the computed amount shall not be made until the project activities covered by such amount are completed. This shall not in any way affect the final date of completion.
 
6. Price escalation/adjustments shall be calculated using the following parametric formulas:

Where K > 1.05 P = Po (K - 0.05) . . . . . . . . . . . . . . . . . . . . . . (Eq. 1)
Where 00.95 < K < 1.05, P = Po

Where K < 0.95

P = Po (K + 0.05) . . . . . . . . . . . . . . . . . . . . . . (Eq. 2)
 
Where P = escalated bid/unit price Po = original bid/unit price
K = fluctuation factor, coefficient representing the increase or decrease of the unit price as a result of price fluctuation.
The value of the K varies for each item of work and represented by the following:

K = a + b (Xi/Xo) + c (Yi/Yo) + d (Zi/Zo) + . . . n (Ni/No) . . . . (Eq. 3)
Where:

a - is a 0.15 fixed coefficient representing contractor's profit, and other non- adjustable items. 
b.c.d . . . . . n - Are the coefficient representing the proportionate value of each pay item to the total b = c + d . . . + n = 0.85.
 
Xi, Yi, Zi . . . Ni - Are the current price indices representing cost of labor, materials and other contract items at the date of the bidding or where the contract has not been the subject of competitive bidding, at the date agreed upon in the contract. 
The sum of a + b + c + d . . . . n must be equal to 1 (100%)

The fluctuation factor and its application in the parametric formula shall include among others, any or combination of the following:

1. Common earthwork fluctuation factor for clearing and grubbing, subgrade preparation, common excavation, common borrow, embankment construction, common fill or backfill and select borrow.

2. Rock Excavation Fluctuation Factor K2 = 0.15 + 0.08 (Li/Lo) + 0.27 (Zi/Zo) + 0.12 (Fi/Fo) + 0.38 (Ei/Eo) 3. Structural Excavation Fluctuation Factor K3 = 0.15 + 0.08 (Li/Lo) + 0.19 (Fi/Fo) + 0.58 (Ei/Eo) 4. Structuaral Backfill Fluctuation Factor K4 = 0.15 + 0.15 (Li/Lo) + 0.17 (Fi/Fo) + 0.53 (Ei/Eo) 5. Daywork Fluctuation Factor for Equipment K5 = 0.15 + 0.05 (Li/Lo) + 0.20 (Fi/Fo) + 0.60 (Ei/Eo) 6. Daywork Fluatuation factor for Labor K6 = 0.16 + 0.85 (Li/Lo) 7. Graded Subbase or base Course Fluctuation Factor Using Screened or Processed Aggregate, Granular Materials, Crushed Adobe or the Like.
    K7 = 0.15 + 0.02 (Li/Lo) 0.62 (Bi/Bo) + 0.05 (Fi/Fo) + 0.16 (Ei/Eo)  
8. Asphaltic Materials Fluctuation Factor for Prime or Tack Coat
    K8 = 0.15 + 0.01 (Li/Lo) + 0.82 (Ai/Ao) + 0.01 (Fi/Fo) + 0.01 (Ei/Eo)
9. Asphaltic Concrete Fluctuation Factor for Bituminous Wearing or Surface Course
    K9 = 0.15 + 0.01 (Li/Lo) + 0.62 (Ai/Ao) + 0.12 (Bi/Bo) + 0.03 (Fi/Fo) + 0.07 (Ei/Eo)
10. Portland Cement Concrete Pavement (PCCP) Fluctuation Factor
    K10 = 0.15 + 0.02 (Li/Lo) + 0.47 (Ci/Co) + 0.21 (Bi/Bo) + 0.02 (Di/Do) + 0.03 (Fi/Fo) + 0.10 (Ei/Eo)
11. Concrete Fluctuation Factor for Curb, Gutter and Sidewalk
    K11 = 0.15 + 0.06 (Li/Lo) + 0.36 (Ci/Co) + 0.16 (Bi/Bo) + 0.03 (Di/Do) + 0.06 + (Fi/Fo) = 0.18 (Ei/Eo)
12. Reinforced Concrete Structure Fluctuation Factor for Bridge, Culvert, Retaining Wall, Bulkhead, Piles, Pre-Cast, Parapat Wall, Railing, Footing, Columns, Supporting Slab and Beam.
    K12 = 0.15 + 0.03 (Li/Lo) + 0.28 (Ci/Co) + 0.13 (Bi/Bo) + 0.03 (Di/Do) + 0.25 (Ri/Ro) + 0.03 (Fi/Fo) + 0.10 (Ei/Eo)
13. Reinforced Concrete Structures Fluctuation Factor for Headwall, Catchbasin, Manhole, Drop Inlet Concrete Post. 14. Reinforced Concrete Pipe (RCP) or Culvert Pipe (RCCP) Fluctuation Factor. K14 = 0.15 + 0.05 (Li/Lo) + 0.61 (Qi/Qo) + 0.02 (Ci/Co) + 0.01 (Bi/Bo) + 0.04 (Fi/Fo) + 0.12 (Ei/Eo) 15. Non-Reinforced Concrete Pipes Fluctuation Factor K15 = 0.15 + 0.13 (Li/Lo) + 0.69 (Qi/Qo) + 0.02 (Ci/Co) + 0.01 (Bi/Bo) 16. Concrete for Structure Class A or B Fluctuation Factor K16 = 0.15 + 0.03 (Li/Lo) + 0.41 (Ci/Co) + 0.19 (Bi/Bo) + 0.09 (Di/Do) + 0.04 (Fi/Fo) + 0.09 (Ei/Eo) 17. Grouted Riprap or Stone Masonry Fluctuation Factor K17 = 0.15 + 0.18 (Li/Lo) + 0.27 (Ci/Co) + 0.13 (Bi/Bo) + 0.07 (Fi/Fo) + 0.20 (Ei/Eo) 18. Concrete Masonry (CHB) Fluctuation Factor K18 = 0.15 + 0.33 (Li/Lo) + 0.30 (Qi/Qo) + 0.13 (Ci/Co) + 0.04 (Bi/Bo) + 0.01 (Fi/Fo) + 0.04 (Ei/Eo) 19. Reinforcing Steel Bars Fluctuation Factor K19 = 0.15 + 0.06 (Li/Lo) + 0.67 (Ri/Ro) + 0.04 (Fi/Fo) + 0.08 (Ei/Eo) 20. Structural Steel Works Fluctuation Factor K20 = 0.15 + 0.03 (Li/Lo) + 0.71 (Si/So) + 0.03 (Fi/Fo) + 0.08 (Ei/Eo) 21. Demolition of Concrete Structure Fluctuation Factor K21 = 0.15 + 0.07 (Li/Lo) + 0.20 (Fi/Fo) + 0.58 (Ei/Eo) 22. Demolition of PCCP Strip Fluctuation Factor K22 = 0.15 + 0.09 (Li/Lo) + 0.19 (Fi/Fo) + 0.57 (Ei/Eo) 23. Demolition of AC Pavement Strip Fluctuation Factor K23 = 0.15 + 0.05 (Li/Lo) + 0.20 (Fi/Fo) + 0.60 (Ei/Eo) 24. Painting Fluctuation Factor with Use of Equipment K24 = 0.15 + 0.28 (Li/Lo) + 0.48 (Ni/No) + 0.02 (Fi/Fo) + 0.07 (Ei/Eo) 25. Painting Fluctuation Factor Using Labor Only K25 = 0.15 + 0.19 (Li/Lo) + 0.66 (Ni/No) 26. Wood Structure Fluctuation Factor for Falsework, Temporary Wood Bridge, Wood Guardrail. K26 = 0.15 + 0.06 (Li/Lo) + 0.63 (Di/Do) + 0.04 (Fi/Fo) + 0.12 (Ei/Eo) 27. Carpentry Works Fluctuation Factor K27 = 0.15 + 0.15 (Li/Lo) + 0.62 (Di/Do) + 0.02 (Fi/Fo) + 0.06 (Ei/Eo) 28. Cast and/or Galvanized Iron Pipes Fluctuation Factor K28 = 0.15 + 0.02 (Li/Lo) + 0.78 (Ii/Io) + 0.01 (Fi/Fo) + 0.04 (Ei/Eo) 29. Steel Pipes Fluctuation Factor K29 = 0.15 + 0.03 (Li/Lo) + 0.69 (Ii/Io) + 0.03 (Fi/Fo) + 0.10 (Ei/Eo) 30. Asbestos Cement Pipes Fluctuation Factor K30 = 0.15 + 0.02 (Li/Lo) + 0.77 (Ki/Ko) + 0.02 (Fi/Fo) + 0.04 (Ei/Eo) 31. PVC Pipes Fluctuation Factor K31 = 0.15 + 0.07 (Li/Lo) + 0.69 (Ji/Jo) + 0.02 (Fi/Fo) + 0.07 (Ei/Eo) 32. Gate Valves and Fire Hydrants Fluctuation Factor K32 = 0.15 + 0.04 (Li/Lo) + 0.77 (Ii/Io) + 0.01 (Fi/Fo) + 0.03 (Ei/Eo) 33. Check Valves Fluctuation Factor K33 = 0.15 + 0.03 (Li/Lo) + 0.79 (Pi/Po) + 0.01 (Fi/Fo) + 0.02 (Ei/Eo) 34. Water Service Connection Fluctuation Factor K34 = 0.15 + 0.10 (Li/Lo) + 0.40 (Pi/Po) + 0.35 (Ji/Jo) 35. Plumbing Fixtures Fluctuation Factor K35 = 0.15 + 0.08 (Li/Lo) + 0.77 (Pi/Po) 36. Plain and Corrugated G.I. Sheets Fluctuation Factor K36 = 0.15 + 0.09 (Li/Lo) 0.76 (Wi/Wo) 37. Cement Plaster Fluctuation Factor K37 = 0.15 + 0.38 + (Li/Lo) + 0.37 (Ci/Co) + 0.10 (Bi/Bo) 38. Marble Floor Finish Fluctuation Factor K38 = 0.15 + 0.07 (Li/Lo) + 0.03 (Ci/Co) + 0.01 (Bi/Bo) + 0.65 (Xi/Xo) + 0.03 (Fi/Fo) + 0.06 (Ei/Eo) 39. Glazed and Ceramic Tiles Fluctuation Factor 40. Window Frames and Grills Fluctuation Factor K40 = 0.15 + 0.09 (Li/Lo) + 0.53 (Si/So) + 0.06 (Fi/Fo) + 0.17 (Ei/Eo) 41. Glazing Fluctuation Factor K41 = 0.15 + 0.03 (Li/Lo) + 0.82 (Gi/Go) 42. Electrical Rough-In Fluctuation Factor K42 = 0.15 + 0.16 (Li/Lo) 0.69 (Vi/Vo) 43. Lighting Fixtures and Devices Fluctuation Factor K43 = 0.15 + 0.13 (Li/Lo) + 0.72 (Ui/Uo) 44. PVC Waterstop (9") Fluctuation Factor K44 = 0.15 + 0.03 (Li/Lo) + 0.82 (Ji/Jo) 45. Electrical Wood Pole Fluctuation Factor K45 = 0.15 + 0.01 (Li/Lo) + 0.73 (Di/Do) + 0.03 (Fi/Fo) + 0.08 (Ei/Eo) 46. Wood Crossarm Fluctuation Factor K46 = 0.15 + 0.11 (Li/Lo) + 0.74 (Di/Do) 47. Lightning Arrester (3,000v to 15,000v) Fluctuation Factor K47 = 0.15 + 0.09 (Li/Lo) + 0.76 (Ti/To) 48. Transformers (10KVA to 50KVA) Fluctuation Factor K48 = 0.15 + 0.01 (Li/Lo) + 0.81 (Ti/To) + 0.01 (Fi/Fo) + 0.02 (Ei/Eo) 49. Bare Copper Wire Fluctuation Factor K49 = 0.15 + 0.04 (Li/Lo) + 0.79 (Ti/To) + 0.01 (Fi/Fo) + 0.01 (Ei/Eo) 50. Bare Aluminum Wire Fluctuation Factor K50 = 0.15 + 0.13 (Li/Lo) + 0.69 (Ti/To) + 0.01 (Fi/Fo) + 0.02 (Ei/Eo) 51. Dredging Fluctuation Factor K51 = 0.15 + 0.06 (Li/Lo) + 0.20 (Fi/Fo) + 0.59 (Ei/Eo) 52. General Construction Fluctuation Factor (for others not covered by any or combination of the above 51 fluctuation factors) K52 = 0.15 + 0.85 (Mi/Mo) Where:
Mi = Current General Construction Price Index Figure
Mo = Base General Construction Price Index Figure
Li = Current Labor Index Figure
Lo = Base Labor Index Figure
Ei = Current Equipment Index Figure
Eo = Base Equipment Index Figure
Ai = Current Asphaltic Material Price Index Figure
Ao = Base Asphaltic Material Price Index Figure
Bi = Current Aggregates Material Price Index Figure
Bo = Base Aggregates Material Price Index Figure
Ci = Current Cement Material Price Index Figure
Co = Base Cement Material Price Index Figure
Di = Current Lumber Material Price Index Figure
Do = Base Lumber Material Price Index Figure
Fi = Current Automotive Fuel Price Index Figure
Fo = Base Automotive Fuel Price Index Figure
Gi = Current Glass and Glazing Material Price Index Figure
Go = Base Glass and Glazing Material Price Index Figure
Hi = Current Hardware Material Price Index Figure
Ho = Base Hardware Material Price Index Figure
Ii = Current Galvanized and/or Cast Iron Pipe
(Plumbing) Material Price Index Figure
Io = Base Galvanized and/or Cast Iron Pipe

(Plumbing) Material Price Index Figure
Ji = Current Polyvinyl Chloride Pipe (Plumbing)

Material Price Index Figure
Jo = Base Polyvinyl Chloride Pipe (Plumbing)
Ki = Current Asbestos Cement Pipe (Plumbing)
Ko = Base Asbestos Cement Pipe (Plumbing)
Ni = Current Paint Material Price Index Figure
No = Base Paint Material Price Index Figure
Pi = Current Plumbing Fixture Material Price Index Figure
Po = Base Plumbing Fixture Material Price Index Figure
Qi = Current Concrete Products Material Price Index Figure
Qo = Base Concrete Products Material Price Index Figure
Ri = Current Reinforcing Steel Material Price Index Figure
Ro = Base Reinforcing Steel Material Price Index Figure
Si = Current Structural Steel Material Price Index Figure
So = Base Structural Steel Material Price Index Figure
Ti = Current Exterior Electrical Material Price Index Figure
To = Base Exterior Electrical Material Price Index Figure
Ui = Current Electrical Fixtures/Devices Material Price Index Figure
Uo = Base Electrical Fixtures/Devices Material Price Index Figure
Vi = Current Electrical (Rough-In) Material Price Index Figure
Vo = Base Electrical (Rough-In) Material Price Index Figure
Wi = Current Metal Products Material Price Index Figure
Wo = Base Metal Products Material Price Index Figure
Xi = Current Tile Work Material Price Index Figure
Xo = Base Tile Work Material Price Index Figure
Zi = Current Blasting Material Price Index Figure
Zo = Base Blasting Material Price Index Figure

7. The following Price Indices shall be used:

Labor Cost Index as published by the Department of Labor and Employment.   Equipment Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Asphaltic Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Aggregates Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Cement Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Lumber Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Automotive Fuel Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Glass and Glazing Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Hardware Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Galvanized and/or Cast Iron Pipe (Plumbing) Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Polyvinyl Chloride Pipe (Plumbing) Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Asbestos Cement Pipe (Plumbing) Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Paint Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Plumbing Fixture Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Concrete Products Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Reinforcing Steel Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Structural Steel Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Exterior Electrical Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Electrical (Rough-In) Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Electrical Fixtures/Devices Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Metal Product Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Tile Work Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   Blasting Material Price Index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.   In the absence of any price index for a specified adjustable item, the nearest related price index shall be used.   8. Price escalation shall be calculated for every whole month and the average fluctuation factor for the month under consideration shall be used. In case the initial month of the contract duration is less than a full month, the average fluctuation factor for that entire month shall be used; in case the last month of the contract duration is less than one half of a full month, the fluctuation factor for the preceding month shall be used, and in case it is more than one half of a full month, the fluctuation factor for that month shall be used.

9. In case of projects where advance payment for mobilization purposes and/or purchases of supplies and materials may have been provided by NIA, no price escalation shall be made for:

a) that portion of work accomplished during the period corresponding to a value equal to the amount of recoupment of the advance payment.   For example:

If during the 6-month period under consideration, ten percent (10%) of the amount payable to the Contract was recouped to recover advance payment, ten percent (10%) likewise of the price escalations calculated to be otherwise payable shall be deducted from the price escalation.

 
b) The cost of construction materials, or supply procured using the advance payment, however, in lieu of deducting the value of price escalation corresponding to such material or supply, the amount equal to the interest rate of 1.25% per month on the outstanding balance which shall be imputed from the time he receives the advance payment (amount of material not used during the period) shall be deducted from the next succeeding price escalation for said material or supply. No payment of imputed interest rate under this paragraph shall be collected in excess of price escalation payment for the period.
In case, any of the above provision is in conflict with the existing Memorandum Circular No. 80-31 of the Ministry of Public Works on price escalation/adjustment dated August 28, 1980 (or with any existing Government policies), the latter shall govern.