Price Index for the calculation. Escalation Factors ( K )
 

For the contract price in the auction to hire contractors.

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1. Ask : ESCALATION FACTOR Or "K Values" ?

Reply : Index used to measure changes in the work at Contractor bids were opened at the envelope. Compared with the period of work in each period. The conditions are as follows.

(1) In use "K Values" Only in cases where the contractor receives from the government, State enterprise, The Local Government Act. And other agencies that are prescribed to be a local administration only.

(2) In the contract. The parties must be clearly stated in the contract  and The contract price in a tender to hire contractors.

2. Ask : "K Values" There is, however. ?

Reply : Implementation "K Values" In use. Beginning of the year 1973 - 1974.  Economic crisis the major oil and construction materials. Is. And a shortage of finished steel and Much higher prices. Affect the construction of direct and intense. Foreign contractors have suffered. Some stop action. Some of them work Because unable to bear the loss. At the same time. The law also affected as well. Cabinet has approved the "K Values" in use.  To assist the contractor to be compensated for damages. The Committee has determined the rules, Condition, Formula, Category and the work he was able to obtain compensation from the government. The Years 1981. The government announced the termination of "K Values".  Since the economic crisis to return to normal. However, On 22 August 1989. Cabinet has agreed to lead "K Values" Used again. As a result of high economic growth. Cause a substantial investment in many fields. Especially, Construction business to support economic growth. As a result, most construction materials. Is Steel shortages and price rises continuously. The construction business has suffered. Government assistance By such a resolution use "K Values" Until now.

3. Ask : Elements. "K Values" ?

Reply : "K Values" The other variables. The follows.

M = Price index of construction materials. (Excluding steel and cement.)
S = Steel price index.
C = Cement Price Index.
G = Price of steel sheets.
F = Index price of diesel fuel
A = Asphalt Price Index.
E = Machinery and equipment price index.
GIP = Price Index dipped galvanized steel pipe.
AC =Price asbestos cement pipe.
PVC = Price Index Plumbing Products PVC.
PE = Price Index pipes HYDENSITY POLYETHYLENE
W = Price Index Electricity Cable
I = Price Index Consumers of the country.

4. Ask : "K Values" It will benefit the contractor. In terms of the law would benefit or not. How?

Reply : "K Values" Used as a tool to help both contractors and the contractors hired to do. That is, Reduce the risk of the contractor. If you have suffered from the building prices have risen. To be compensated by the difference in the prices of construction materials at the auction also.The delivery date of each installment. At the same time employ the use "K Values" As a tool to prevent unfair advantage to contractors. By adding the prices of construction materials for the changes ahead too much.

5. Ask : What type of construction work. The condition can be used "K Values" ?

Reply : Construction will be "K Values". Was calculated to obtain compensation.  have 5 Category. The formula used to calculate, 35 formula, follows.

- The Building 1 formula

- The Soil 3 formula

- Way 7 formula

- Irrigation works 7 formula

- System utilities 17 formula

This includes renovation and repair, such as the type of work.

6. Ask : The contractor will know how different. What types of work that will use the formula. And also ask for details of the formula where ?

Reply : The general contractor on the job of government or Enterprises. The contract specifies that, A variable-price contracts. Contracts often specify a formula for such a job. However, If a contractor needs to know the detailed formulas. You ask, Bureau of the Budget The Department of Trade and Economic Indices. Office of the Permanent Secretary of Ministry of Commerce.

7. Ask : The number used in the formula instead of each building. I do not ?

Reply : The number used in the formula instead of each building. Is, Variables were included 13 list. The elements of "K Values" (No.3). Price indices have been prepared and published on a monthly basis. The Department of Trade and Economic Indices. Office of the Permanent Secretary. Ministry of Commerce.

8. Ask : Contractors will be called on the government to pay compensation in every case or not ?

Reply : Although the contract with the contractor to hire a contractor. In accordance with the conditions, Criteria, Category  and the nature of work as specified. The contract price adjustments. Has already been completed. The contractor was unable to claim government compensation has always been. That is, Must be calculated "K Values".  Using the formula under construction at Months of delivery compared with "K Values".  Months of opening sealed bids. If the change of "K Values".  For each period is greater than 4 percent (or 1.04). Contractors will be "K Values" the request for compensation.  But at the same time. If "K Values" of each work period is less than 4 percent (or 0.96). The contractor will be hired for work. Recovered from the contractor in the construction materials dropped. It may take a deduction for the next installment. Or deduction from the contract as security devices.

9. Ask : Calculate K, Do it ?

Reply : Calculate K, From the formula as specified in the contract. Using the index number 13. List prepared by the Bureau of Trade and Economic Indices. Office of the Permanent Secretary. Ministry of Commerce as the basis for calculation.

1. If there are many types of construction work. Included in the contract. Prior to the construction of each type of job to clear it, and in accordance with the formula set forth.

2. Calculate K, The use of the decimal 3 places in every step, without rounding. And assigned to a number of relationships (Comparison) to be successful before. Then took the results to be multiplied by the number of pages with that number (for example).

3. Consider the extra money. Or reduce the cost price of the contract signed with the employer. The K value according to the formula for the construction. In the month of delivery have changed the value of K in the envelope auction for more than 4% or more.  By only 4% of the excess tax increase. Or decrease depending on the case (without the first 4%).

4. If the contractor can not complete construction of the duration of the contract. It is the fault of the contractor according to the formula K value were to be used in calculating the fees.

The K value of the last month of the contract or the value of K that deliver real Depending on the value of K will be less than.

5. Payment of each installment. To pay a contractor under the contract to be made each period. Increase or decrease in value will be calculated on the price index of construction materials. The K value was calculated for the month of delivery of that period, as indeed. When calculating the extra money now. To get an agreement about money with the Bureau of the Budget.

Sample: The calculation of compensation for work in the construction contract price (K Values).

Set K = 1

In the case of receiving compensation.  K > 1.04  (K need more 1.04)

In the event of a refund offset. K < 0.96  (K Less than 0.96)

Construction of school buildings, 1. Value of 2,570,000.00 Baht. Competition on January 30, 1990. The schedule for payments as follows.

Period No. 1 Due Date July 20, 1990. Worth 514,000 .- Baht

Period No. 2 Due Date September 5, 1990. Worth 385,500.- Baht 

Period No. 3 Due Date October 20, 1990. Worth 385,500.- Baht

Period No. 4 Due Date November 30, 1990. Worth 642,500.- Baht

Period No. 5 (Final) Due Date January 15, 1991. Worth 642,500.- Baht

่Index in the envelope auction on January 30, 1990.

Io = 112.2 , Co = 111.7 , Mo = 126.7 , So = 140.0

The formula for buildings.

K = 0.25 + 0.15 It/Io + 0.10 Ct/Co + 0.40 Mt/Mo + 0.10 St/So

Work period No. 1 Date July 20, 1990.

The index in the month of delivery.

It = 115.8 , Ct = 117.6 , Mt = 132.7 , St = 140.8

K = 0.25 + 0.15(115.8/112.2) + 0.10(117.6/111.7) + 0.40(132.7/126.7) + 0.10(140.8/140.0)
= 0.25 + 0.15(1.032) + 0.10 (1.052) + 0.40(1.047) +0.10(1.005)
= 0.25 + 0.154 + 0.105 + 0.418 + 0.100
= 1.027

K value changes less than 4% did not receive compensation.

Work period No. 2  Date September 5, 1990.

The index in the month of delivery.

It = 116.7 , Ct = 127.8 , Mt = 135.1 , St = 140.4

K = 0.25 + 0.15(116.7/112.2) + 0.10(127.8/111.7) + 0.40(135.1/126.7) + 0.10(140.4/140.0)

= 0.25 + 0.15(1.040) + 0.10 (1.144) + 0.40(1.066) + 0.10(1.002)
= 0.25 + 0.156 + 0.114 + 0.426 + 0.100
= 1.046

K value changes more than 4%. Equal, 1.046 - 1.04 = 0.006

Will receive additional compensation = 0.006 X 385,500 = 2,313.- บาท

Work period No. 3 Date October 20, 1990.

The index in the month of delivery.

It = 119.0 , Ct = 167.5 , Mt = 137.2 , St = 140.9

K = 0.25 + 0.15(119.0/112.2) + 0.10(167.5/111.7) + 0.40(137.2/126.7) + 0.10(140.9/140.0)

= 0.25 + 0.15(1.060) + 0.10 (1.499) + 0.40(1.082) + 0.10(1.006)
= 0.25 + 0.159 + 0.149 + 0.432 + 0.100
= 1.090

K value changes more than 4%.  Equal, 1.090 - 1.04 = 0.050

Will receive additional compensation = 0.050 X 385,500 = 19,275.- บาท

Work period No.4 Date November 30, 1990.

The index in the month of delivery.

It = 119.5 , Ct = 167.5 , Mt = 137.2 , St = 139.6

K = 0.25 + 0.15(119.5/112.2) + 0.10(167.5/111.7) + 0.40(137.2/126.7) + 0.10(139.6/140.0)

= 0.25 + 0.15(1.065) + 0.10 (1.499) + 0.40(1.082) + 0.10(0.997)
= 0.25 + 0.159 + 0.149 + 0.432 + 0.099
= 1.089

K value changes more than 4%. Equal, 1.089 - 1.04 = 0.049

Will receive additional compensation = 0.049 X 642,500 = 31,482.50 บาท

Work period No.5  Date January 15, 1991.

The index in the month of delivery.

It = 119.1 , Ct = 151.7 , Mt = 138.4 , St = 137.1

K = 0.25 + 0.15(119.1/112.2) + 0.10(151.7/111.7) + 0.40(138.4/126.7) + 0.10(137.1/140.0)

= 0.25 + 0.15(1.061) + 0.10 (1.358) + 0.40(1.092) + 0.10(0.979)
= 0.25 + 0.159 + 0.135 + 0.436 + 0.097
= 1.077

K value changes more than 4%. Equal, 1.077 - 1.04 = 0.037

In this period the work and equipment 4 list.  Cash 149 600.- Baht,  Include.

1. Blackboard 8 series. 22,400.- Baht
2. Tables a teacher 8 series. 12,000 Baht
3. Tables a student 320 series.  112,000 Baht
4.Extinguisher 2 series. 3,200 Baht
Total 149,600.- บาท

So, to get compensation = (642,500 - 149,600) X 0.037 = 18,237.30 Baht
And awarded the contract (5 Period) = 2,313 + 19,275 + 31,482.50 + 18,237.30
= 71,307.80 Baht

If a refund money K values.

Supposed to work period No.5 (Final period, January 15, 1991 ). The index series are as follows.

It = 107.9 , Ct = 110.5 , Mt = 113.2 , St = 135.2

K = 0.25 + 0.15(107.9/112.2) + 0.10(110.5 /111.7) + 0.40(113.2/126.7) + 0.10(135.2/140.0)

= 0.25 + 0.15(0.961) + 0.10 (0.989) + 0.40(0.893) + 0.10(0.965)
= 0.25 + 0.144 + 0.098 + 0.357 + 0.096
= 0.945

The K value of less than 4%. Equal, 0.96 - 0.945 = 0.015

In this period, the value must be restored = (642,500 - 149,600) x 0.015 = 7,393.50 Baht

And awarded the contract (5 Period) = 2,313 + 19,275 + 31,482.50 - 7,393.50

= 45,676.50 Baht

10. Ask : Renewal of contract for construction of the original contract. Contractors to "K Values" was used during the time the contract out. To obtain compensation or not ?

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Reply :If the contractor can not complete the contract. By force majeure. But the government gave approval for the employment contract and agreement is the contract price. Contractor was able to bring "K Values" was calculated to obtain compensation at the time the contract out to them.

11. Ask : If the government can not pay compensation to the contractor in the fiscal year immediately delivered. It will be paid in the next fiscal year. Contractor will charge interest on the government or not ?

Reply : Payments to contractors in the event that the contract price for it. If the government must pay compensation for the fiscal year. Contractors can not charge interest from the government and the duty of the contractor will need to obtain compensation from the Bureau of the Budget within 90 days. From the date of final delivery. If not, then the contractor is not entitled to claim compensation for the construction of the law any longer.

12. Ask : If you have a problem with the calculation of "K Values" will be able to call from any location ?

Reply : For further details on costs, the budget office. Budget Bureau Param6 Road, Bangkok 10400 Tel: 0-2273-9027.

13. Ask : If you wish to calculate the index number of "K Values" and more information will contact you ?

Reply : Department of Trade and Economic Indices, Ministry of Commerce. As the agency responsible for the preparation of the index to be included in the calculation of "K Values" published on a monthly basis. It is published around the 5th of next month and available at the Department of Trade and Economic Indices. Ministry. Ministry of Commerce. (Riverside Building, Room 20701)  No. 44/100 Nonthaburi 1 Road, Moo 1, Bang Kra Sor, Muang, Nonthaburi 11000.

Regional contact or request documents from the Provincial Agriculture Office. Which does not require costly, but officials in the office will need a certified copy. Since this variable is the official document that the contractor will need to apply for compensation for construction.