http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.85Change: 0.03
R/$ = 10.93Change: 0.05
Au 1231.31 $/ozChange: -0.06
Pt 1248.50 $/ozChange: -1.00
 
 
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
Integrated energy and chemical company Sasol has partnered with Unisa Graduate School of Business Leadership (SBL) professor and founder and CEO of PanAvest Partnership Dr Douglas Boateng to publish a series of books on executive supply chain management aimed at...
Rwanda has joined a number of East African countries seeking to import electricity from Ethiopia as its demand grows. After it became apparent several generation project it is implementing will not come on stream early enough, now plans to import 400 MW from Ethiopia...
More
 
 
Latest News
Swedish Ambassador to South Africa Christian Meuwly will next week inaugurate the final roll-out of the new vertical shaft brick kiln (VSBK) at clay brick manufacturer Langkloof Bricks’ facility in Jeffrey’s Bay. The VSBK formed a part of economic, social and...
Hot on the heels of the launch of Rustenburg’s rapid transport system’s brand name and logo last week, a negotiation framework agreement (NFA) has been formally agreed to and signed by the Rustenburg Local Municipality (RLM) and taxi and bus operators affected by the...
The runway at the George Airport, in the Western Cape, has been rehabilitated to improve safety, in terms of run-off and storm water drainage, and the structural capacity of the pavement surface. The scope of work comprised the extension of Runway 11/29, the...
More
 
 
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
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 road...
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.
 
 
 
 
 
This Week's Magazine
Integrated energy and chemical company Sasol has partnered with Unisa Graduate School of Business Leadership (SBL) professor and founder and CEO of PanAvest Partnership Dr Douglas Boateng to publish a series of books on executive supply chain management aimed at...
MORNÉ DU PLESSIS Increased urgency and burgeoning awareness of the importance of these issues are beginning to change political risks and, thus, State responses to environmental concerns
The World Wide Fund for Nature’s (WWF’s) 2014 Living Planet Index (LPI) indicates that there has been a 52% decline in vertebrate species since 1970. The Index tracked the trends of 10 000 discrete populations of over 3000 vertebrate species between 1970 and 2010.
Rwanda has joined a number of East African countries seeking to import electricity from Ethiopia as its demand grows. After it became apparent several generation project it is implementing will not come on stream early enough, now plans to import 400 MW from Ethiopia...
Metrorail’s first new passenger train will arrive in November next year, says Passenger Rail Agency of South Africa (PRASA) CEO Lucky Montana. “Next year we will be able to put our hands around the infrastructure and equipment we have been talking about for so long.”
The Competition Commission has launched an investigation into what it says are “price fixing, market division and collusive tendering in the market for the manufacture and supply of automotive components to original equipment manufacturers” (OEMs, or vehicle...
 
 
 
 
 
 
 
 
 
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