Cost escalation in Construction Variations ~ Quantity Surveying ...
2) Is there any point in your contract stating that the contract is back to back, i.e., if only client pays then the GC pays? If that is the case you request your GC to provide the formula that is mentioned in his contract with client for arriving at escalation. So that there will be uniformity.
3) As a last recourse Escalation can be arrived at as follows:
Step 1: arriving percentage of components
Suppose you have the following components involved in your work : Labour, Material, Plant & Machinery.
Now, based on the rate analysis of the rate quoted at the time of Tender workout the cost involvement of each component.
Based on the scope of Work try to estimate costwise the % of each component:
Say your Project cost is 100. Removing profits and Overhead component say 15%, the cost price of work components is 85.
Say by your total estimate with your tender rates you obtained the following percentages Labour cost =10%, Fuel Cost = 10% (fuel cost is important in India), Material Cost = 60%, P&M cost=20% (total making 100%); ……..(1)
now you can safely regard that for a given amount of work during a month (period) the above arrived percentages of cost will give you the approximate cost involvement of each component.
By way of illustration suppose work done during july 2010 is Rs. 200, labour component cost will be 0.85x200x10%.
for specific materials such as M1 (say, Steel), M2 (say, Stainless Steel ) and M3 (for materials other than steel and stainless steel).
Assess the quantity of steel consumed during the month and then calculate the cost using the basic rate quoted during tender for steel, say cost is Rs.
Escalation Of Construction Costs - Bookshelf
Effective project management through applied cost and schedule control
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