http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.87Change: -0.01
R/$ = 12.74Change: -0.09
Au 1082.90 $/ozChange: -9.62
Pt 954.00 $/ozChange: -4.50
 
 
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 Letters 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|Africa|Contracting
Engineering|Africa|Aggregate|Africa|Contracting
engineering|africa-company|aggregate|africa|contracting
© 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
Creamer Media Senior Deputy Editor
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other News This Week News
The statutory body responsible for skills development and support in the banking sector, BANKSETA, was investing R68-million in the capacity building project of the University of Venda (UniVen), announced Bankseta company secretary Caroline King at a media event in...
LIONEL MOYAL Cloud services providers must compete against other cloud services providers for business by providing up-to-date systems and services
Legacy information technology (IT) systems are becoming increasingly obsolete because of the maturity, efficiencies and cost effectiveness of cloud-based IT services, says information and communication technology major T-Systems subsidiary Intervate head Lionel...
More
 
 
Latest News
Updated 6 hours ago South Africa has been shortlisted by The European Outsourcing Association (EOA) for the Offshoring Destination of the Year 2015 award, competing against Bulgaria and Latvia. Now in its sixth year, the EOA Awards recognised and celebrated the efforts of companies who...
Trade and Industry Minister Dr Rob Davies
Updated 6 hours ago South Africa planned to offer five reasons as to why it should retain its status as an African Growth and Opportunity Act (Agoa) beneficiary during public hearings scheduled for Friday in Washington DC. The US House of Representatives passed a ten-year extension to...
Updated 6 hours ago The Competition Commission on Tuesday approved telecommunications giant Telkom’s buy-out of Business Connexion (BCX) with conditions. The conditions included a price freeze on affected products in the upstream by Telkom, a limit on the number of job losses arising...
More
 
 
Recent Research Reports
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Electricity 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Road and Rail 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
Daimler truck test engineer Dirk Stranz pushes one button, and then retracts his hands from the steering wheel of the Mercedes-Benz Future Truck 2025. “And now the truck is driving itself.”
The statutory body responsible for skills development and support in the banking sector, BANKSETA, was investing R68-million in the capacity building project of the University of Venda (UniVen), announced Bankseta company secretary Caroline King at a media event in...
LIONEL MOYAL Cloud services providers must compete against other cloud services providers for business by providing up-to-date systems and services
Legacy information technology (IT) systems are becoming increasingly obsolete because of the maturity, efficiencies and cost effectiveness of cloud-based IT services, says information and communication technology major T-Systems subsidiary Intervate head Lionel...
ARMANDÉ KRUGER Balancing the collection and processing of data must be aligned to strategy
Many complementary services enable companies to derive broad value from data inside and outside them. The complexity of data management means that companies’ strategies determine the various data systems and functions they will use, says PBT Group regional sales...
The South African Civil Aviation Authority (SACAA) has announced that it had awarded the country’s first remotely piloted aircraft systems (RPAS) pilot’s licence. It was issued on Friday, July 10, to SACAA employee and qualified commercial pilot Nicole Swart,...
 
 
 
 
 
 
 
 
 
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
Subscribe Now for $96 Close
Subscribe Now for $96