http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.01Change: 0.00
R/$ = 10.67Change: -0.04
Au 1287.51 $/ozChange: 0.01
Pt 1424.50 $/ozChange: -1.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Mar 13, 2009

Solution on the way for users of CPI in escalation contracts

Back
Engineering|Africa|Aggregate|CPI|Group Five|Murray & Roberts|Stefanutti|WBHO|Africa|South Africa|Contracting|Food|Basil Read|Patrick Kelly|Pierre Blaauw|Sima C-PIX DV-6400 Digital Camera
Engineering|Africa|Aggregate||Africa||Contracting|||
engineering|africa-company|aggregate|cpi-company|group-five|murray-roberts|stefanutti|wbho|africa|south-africa|contracting|food|basil-read|patrick-kelly|pierre-blaauw|sima-c-pix-dv-6400-digital-camera
© Reuse this



Statistics South Africa (StatsSA), which last week released the first official consumer price index (CPI) based on the much-publicised new basket and weights, 
reported that it was preparing a mathematical remedy for those companies and individuals currently battling to apply the new CPI to escalation contracts.

The statistical agency indicated that it had received a number of enquiries from engineering contractors, in particular, indicating that they had been inconvenienced by the fact that the new CPI, and its rebasing from 2000 to 2008, had disrupted the continuous time series.

This had made it difficult for them to apply their traditional formulas to those contracts that embraced escalation clauses for labour.

CPI executive manager Patrick Kelly explained that the two key changes had been the discontinuation of CPIX (CPI excluding interest rates on mortgage bonds) and the intro-
duction of a parallel survey to ensure a like-on-like comparison to generate annual inflation figures.

“Both of these cause a disruption of the continuous time series,” Kelly outlined to Engi-neering News, acknowledging that this was affecting those who use the CPI in “contract adjustments, legal proceedings and the like”.

But he stressed that StatsSA was fully aware of the problem and reported that a remedy was being compiled and would be made available on the agency’s website as from mid-March.

A set of indices, which will link the new indices (base period 2008) with the historical indices (base period 2000), would be made available, while a continuous time series would be prepared for the main CPI aggregate indices 
(such as headline inflation, CPIX and food) for each provincial aggregate and for each primary urban area.

“Historical tables will be provided, as well as a factor for each index to provide for forward continuity,” Kelly assured.

South African Federation of Civil Engi-
neering Contractors (Safcec) economist Pierre Blaauw told Engineering News that contractors who applied escalation formulas to their contracts needed the conversion factor to 
ensure that their escalation calculations were in fact correct.

Safcec’s membership is drawn from across the engineering contracting community and includes companies such as Murray & Roberts, Grinaker-LTA, Group Five, WBHO, Stefanutti Stocks and Basil Read.

Blaauw said that the CPI was an important component for calculating labour escalation, while the producer price index, which had not been adjusted, was employed for factors such as fuel, materials, and plant and machinery.

“Therefore, we have advised our members to continue to use the December figures for any escalation certificates that need to be issued ahead of March 16,” he explained.

Kelly urged CPI users to amend contracts or legal agreements, where appropriate, as soon as possible, so as to use the headline 
inflation measure.

Edited by: Martin Zhuwakinyu
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other News This Week News
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
More
 
 
Latest News
The pump prices of both grades of petrol and wholesale diesel, as well as the maximum retail prices of illuminating paraffin and liquefied petroleum gas (LPG), are set to decrease from September 3, the Department of Energy said on Friday. Petrol would drop by 67c/l,...
The amount owed to municipalities for services has continued to rise, reaching R94-billion by June, compared with the R93.3-billion recorded in December. Households still accounted for the bulk of the aggregate municipal consumer debts; however, this had declined...
More
 
 
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
 
 
 
 
 
This Week's Magazine
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
UK engineering support services provider Babcock is set to deliver the largest order of global truck manufacturer DAF’s truck tractors in Southern Africa to bulk carrier road-based logistics company Ngululu Bulk Carriers (NBC), with 133 trucks to be delivered in...
Digital radio communications in the African local government space can open up the world, but have many challenges to overcome, notes integration and migration of legacy radio communications infrastructure with digital mobile radio company Emcom Wireless head of...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks