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APPENDIX 1
QUESTIONNAIRE SURVEY
Introduction
Confidentiality
PART- A
A1 Name : ________________________________
A2 Designation : ________________________________
Project Data
Please respond to the questions given below with reference to the projects
executed by your organization in the last three years
Moderately
Moderately
Strongly
Strongly
Slightly
Slightly
Neutral
Question
PART-B
Very Very
low medium high
low high
Client – related factors
B1 Number of change / extra
work orders
B2 Slow decision making
B3 Delay in contract award
B4 Delay in handing over of site
193
Very Very
low medium high
low high
B5 Unrealistic schedule
B6 Cash flow during construction
Architect related factors
B7 Deficiencies in cost estimate
and specification prepared
B8 Incomplete Architectural
drawings
B9 Delay in work approval
B10 Variation orders
B11 Poor information and
dissemination
B12 Inadequate supervision
Structural Engineer –
related factors
B13 Incomplete structural
drawings
B14 Structural design variations
B15 Inadequate supervision
B16 Late issuance of instruction
B17 Poor services and design
information
Contractor – related factors
B18 Planning and scheduling
deficiencies
B19 Non-availability of sufficient
professionals and Managers
B20 Non-availability of sufficient
amount of skilled labour
B21 Financial difficulties
B22 Low bid
B23 Lack of coordination between
project participants
194
Very Very
low medium high
low high
External factors
B24 Bad weather
B25 Strike
B26 Productivity
B27 Environmental impact
B28 Site conditions
B29 Price escalation
Numeric
Verbal Scale Explanation
value
1 Equal important to both elements Two elements contribute
equally
3 One is moderately more important Experience and judgement
favor
5 One is strongly more important Strong favor
7 Very strong importance over the Very strong dominance
other
9 Extreme importance over the other Indisputable dominance
2,4,6,8 Intermediate values Compromise between two
levels
195
Physics 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Chemistry
Chemistry is strongly preferred than Physics
Client 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Architect
Client 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Structural
Engineer
Client 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Contractor
Client 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 External
factor
Architect 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Structural
Engineer
Architect 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Contractor
Architect 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 External
factor
Structural 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Contractor
Engineer
Structural 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 External
Engineer factor
Contractor 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 External
factor
1 Client
2 Architect
3 Structural Engineer
4 Contractor
5 External factor
196
PART-C
Very Very
Low Medium High
Label low high
1 2 3 4 5
C1 Inflation
C2 Exchange Rates
C3 Environmental
Protection Cost
C4 Freight and
Transportation Cost
C5 Demand and
Supply
C6 Government
Polices and
Reguations
C7 Taxes
C8 Interest Rate
C9 Power Tariff
C10 Raw Material Input
Cost
C11 Labour Cost
C12 Technology
Upgradation Cost
C13 Price Increase by
the Manufacturer
Considering
Market Condition
197
Cement 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Steel
Cement 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Brick
Cement 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Sand
Coarse
Cement 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9
aggregate
Cement 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Timber
Steel 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Brick
Steel 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Sand
Coarse
Steel 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9
aggregate
Steel 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Timber
Brick 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Sand
Coarse
Brick 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9
aggregate
Brick 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Timber
Coarse
Sand 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9
aggregates
Sand 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Timber
1 Cement
2 Steel
3 Brick
4 Sand
5 Coarse aggregates
6 Timber
PART –D
D1 The questions below are related to the escalation clauses used in the
construction contracts in India. Please give your response with
respect to the escalation clause that you have work experience with.
My responses are with respect to the following escalation clause:
CPWD MES
Others (please attach a sheet giving the clause or please write the
clause in the space below)
60-70%
70-80%
80-90%
100%
existing price escalation clause
reflect the ACTUAL price
escalation for the following
components :
D2 Cement
D3 Steel
D4 Other Materials /Materials
D5 Labour
D6 POL
199
Very Low
Very high
Medium
High
Low
D7 Satisfaction level with regard to Time for
consideration of escalation clause in the
contract
D8 Satisfaction level of escalation clause in
the contract
Disagree Agree
Strongly
Strongly
Moderat
Moderat
Slightly
Slightly
Neutral
ely
ely
1 2 3 4 5 6 7
D10 WPI is not suitable
for calculating
compensation for
escalation of the
contruction projects
D11 Building cost index
is more appropriate
index for
calculating
escalation payment
for the construction
projects
200
D11 Please give the appropriate values for coefficients used in the
escalation formula for cement, steel, material, labour and POL, which
denote their percentage contribution in terms of costs of the over all
work based on your project experience.
You may take any FOUR construction projects you have recently
executed.
D12 What are the factors influencing the rise in price of construction
materials like steel, cement, bricks, coarse aggregate and sand?
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
D13 What are your suggestions for controlling the price of construction
materials like steel, cement, bricks, coarse aggregate and sand ?
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
201
D14 What are the factors influencing the increase in wages of labours?
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
D15 What are your suggestions for controlling the price of labours?
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
D16 Do you wish to give any suggestion with regard to cost escalation
clause to improve satisfaction levels of both owner and contractor?
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
DEFINITION
APPENDIX 2
The contractor shall, for the purpose of this condition, keep such
books of account and other documents as are necessary to show the amount of
any increase claimed for reduction available and shall allow inspection of the
same by a duly authorized representative of the Government, and further
shall, at the request of the Engineer-in-charge may require any documents so
kept and such other information as the Engineer-in-charge may require.
The amount of the contract shall accordingly be varied for all such
materials and will be worked out as per the formula given below for
individual material:-
206
CI0 = All India Wholesale Price Index for the material for period
under consideration. 'as 'published by Economic advisor to
Government of India, Ministry of Industry and Commerce.
(i) The base date for working out such escalation shall be the last
stipulated date of receipt of tenders including extension, if any.
W = N-(K+L)
(iv) The compensation foe escalation for cement, steel, materials and
P.O.L. shall be worked as per the formula given below:-
Xc Cl Cl 0
Vc WX X
100 Cl 0
SI = All India Wholesale Price Index for steel (bars and rods)
for the period under consideration as published by
Economic Advisor to the Government of India, Ministry of
Industry and Commerce. However, the Price Index shall be
'-' minimum of the following:
(i) Index for the month when the last consignment of
steel reinforcement for the work is procured or
(ii) Index for the month in which half of the stipulated
contract period is over
(iii) Index for the period under consideration
SI0 = All India Wholesale Price Index for steel (bar and rods)
published by the Economic Advisor to Govt. of India, Ministry
of Industry and Commerce as valid on the last stipulated date of
receipt of tender including extension, if any.
Xm MI MI 0
Vm Wx x
100 MI 0
Z F1 F10
VF Wx x
100 FI 0
Flo = All India Wholesale Price Index for Fuel, Oil and
Lubricant valid on, the last stip41ated date of receipt of
tender including extension, if any.
213
(v) The following principles shall be followed while working out the
indices mentioned in para (iv) above.
(b) The index (MI/FI etc.) relevant to any quarter/period for which
such compensation is paid shall be the arithmetical average of the
indices relevant to the three calendar months. If tile period up to
date of completion after the quarter covered by the last such
installment of payment, is less than three months, the index MI and
FI shall be the average of the indices for the months falling within
that period.
(vi) The compensation for escalation for labour shall be worked out as
per the formula given below:-
Y LI LI 0
VL Wx x
100 LI 0
(vii) The following principles will be followed while working out the
compensation as per sub-para (vi) above. .
(b) The escalation for labour also shall be paid at the same quarterly
intervals when escalation due to increase in cost of materials and/or
P.OL is paid under this clause. If such revision of minimum wages
takes place during any such quarterly intervals, the escalation
compensation shall be payable at revised rates only for work done
in subsequent quarters:
215
(viii) In the event the price of materials and/or wages of labour required
for execution of the work decrease/s, there shall be a downward
adjustment of the cost of work so that such price of materials and/or
wages of labour shall be deductible from the cost of work under
this contract and in this regard the formula herein before stated
under this Clause 10CC shall mutatis mutandis apply, provided
that:
(a) no such adjustment for the decrease in the price of materials and/or
wages of labour aforementioned would be made in case of contracts
in which the stipulated period of completion of the work is equal to
or less than the time as specified in Schedule 'F'.
(ix) Provided always that the provision of the preceding clause 10C and
10 CA shall not be applicable for contracts where provisions of this
clause are applicable but in cases where provisions of this clause
are not applicable, the provisions of Clause 10C and 10 CA will
become applicable.
216
(a) Materials
W1 W 0
E M (Vm 2 VM 1) x
W0
(KM
VM xVg ) (Vs VB )
100
WO = As for W1 but the index as on the last due date for receipt
of the tender.
Fuel :
(Kp F1 FO
Ep Vgl ) x
100 FO
F1 = Whole sale price index for sub group for fuel, power, light
and lubricants (Base 1970-71 = 100) published by
Economic Adviser to Govt of India as on the date of
commencement of the period of reckoning.
FO = As for F but the index as on the last due date for receipt of
tenders.
Notes :
3. No adjustment in prices shall b:: made for any work done with material
brought at site after the due date 01 completion or extension of time
granted under Condition 11 of IAFW-2249 (whichever is later) for the
work under the contract.
LABOUR
E KL L Lo
x V g Ix I
L 100 LO
(a) The periodicity for working out the variations will be three
months. The first variation would be for the period of three
months reckoned from the last due date for receipt of tenders.
(b) Whole Sale Price Index for all commodities are published
every week for the week ending Saturday. Thus the Index
222
applicable for any day shall be the one applicable for the
corresponding week ending Saturday.
(i) Price adjustment for increase or decrease in the cost due to labour
shall be paid in accordance with the following formula:
C1 = The all India average wholesale price index for cement for
the quarter under consideration as published by Ministry of
Industrial Development, Government of India, New Delhi
So = The all India average wholesale price index for steel (Bars
and Rods) on the date of agreement as published by the
Ministry of Industrial Development, Government of India,
New Delhi
Si = The all India average wholesale price index for steel (Bars
and Rods) for the quarter under consideration as published
by Ministry of Industrial Development, New Delhi .
Note: For the application of this clause, index of Bars and Rods
has been chosen to represent steel group.
(v) Price adjustment for increase or decrease in cost POL (fuel and
lubricant) shall be paid in accordance with the following formula:
Note: For the application of this clause, the price of High Speed
Diesel oil has been chosen to represent fuel and lubricants
group.
226
(vi) Price adjustment for increase or decrease in the cost of plant and
machinery spares procured by the Contractor shall be paid in
accordance with the following formula:
The following percentages will govern the price adjustment for the
entire contract:
1. Labour - PI 30.00%
2. Cement – Pc 10.00%
3. Steel - Ps 22.00%
4. Bitumen – Pb 00.50%
5. POL - Pt 00.50%
6. Plant and Machinery Spares – Pp 04.00%
7. Other materials – Pm 33.00%
Total 100%
228
i. The base date for working out such escalation shall be the last
stipulated date of receipt of tenders including extension, if any.
ii. The cost of work on which the escalation will 'be payable shall be
reckoned as below: -
229
CI : All India wholesale index for Cement for the period under
consideration as published by the Economic Adviser to
Government, of India, Ministry of Industry and Commerce
Sl : All India Wholesale index for Bars and Rods (Steel) for', the
period under consideration as published by the' Economic
Adviser to Government. of India, Ministry of Industry and
Commerce, New Delhi '
Slo : All India wholesale index for Bars and Rods (Steel) 'as
published by the Economic Adviser to' Government of India,
Ministry of Industry and Commerce, for the period under
consideration and that valid on the last stipulated date of
receipt of tender including extension If any.
Flo : AII India wholesale index for fuel, power, light and
lubricants as 'published weekly, by the Economic Adviser to
Government of India, Ministry ,of Industry, New. Delhi
valid on the last stipulated date of receipt of tender including
extension if any.
vi) The compensation for escalation for labour shall be worked out as
per the formula given below:-
vii) The following principles will be followed while working out the
compensation as per sub-para (vi) above.
viii) In the event the -price of 'materials and/or wages of labour required
for execution of the work-decrease/s, there shall be a downward
adjustment of .the cost of work so that such price 'of materials
and/or wages of labour shall be deductible from the cost of work
under this contract 'and in this regard the formula herein before
235
the execution of the contract within the control of the contractor. Provided
however, no reimbursement shall be made if the increase is not more than
10% of the said prices! wages and if so, the reimbursement shall be made
only on the excess over 10% and provided further that any such increase shall
not be payable if such increase has become operative after the contract or
extended date of completion of the work in question. If during the progress of
the works, the price of any material incorporated in the works (not-being
material supplied from the Engineer-in-Charge's stores in accordance with
Clause 10 hereof) and/or wages of labour is decreased as a result of the
comming into force of any fresh law or statutory rule or order (but not due to
any changes in sales tax) and such decrease exceeds ten percent of the prices
and/or wages prevailing at the of receipt of the tender for the work, Airports
Authority of India shall in respect of materials incorporated in the works (not
being materials supplied from the Engineer-in-Charge's stores in' accordance
with Clause 10 hereof) and or labour engaged on the execution of the work
after the date coming into force of such law, statutory rule or order be entitled
to deduct from the dues of the contractor such amount as shall be equivalent
to difference between the price of materials and! or wages as they prevailed at
the time of receipt of the tender for the work minus ten percent thereof and
the prices of material und/ or wages of labour on the coming into force or
such law, statutory rule or order.
The contractor shall, for the purpose of this condition keep such
books of account and other document as are necessary to show the amount of
any increase claimed or reduction available and shall allow inspection o{the
same by a duly authorized representative of Airports Authority of lndia and
further shall, at the request of the Engineer-in-Charge furnish verified in such
a manner as the Engineer-in-Charge may require, any documents so kept and
such other information as the Engineer-in-Charge may require. .
237
1. The base date for working out such escalations shall be the last date
on which tenders were stipulated to be received.
2A. Refer. foot note at the end of item No. adjustment of escalation in
cost of bitumen.
Xx ( M 1 M 10 )
Vm = Wx
100 M 10
Y x( L1 L10 )
V1 = Wx
100 L10
Zx ( F 1 F 10 )
Vf = Wx
100 F 10
Whereas :
Ml and MIO = All India whole sale index for all commodities for
the period under reckoning as published by the Economic Advisor to the
Govt. of India, Ministry of Industry and Commerce, or C.P.W.D. indices for
the period under consideration and that valid at the-time of receipt of tender
respectively.
(b) The index (M1/F1 etc.) relevant to any quarter for which such
compensation is paid shall be the arithmetical average of the
indices relevant to the three calendar months, if the period up
to date of completion after the quarter covered by the last such
installment of payment is less than three months, the index M,
and F, shall be the average of the indices for the months
failing within that period.
(c) The base index, M10, F10 etc. shall be the one relating to the
month in which the tender was stipulated to be received.
(e) The escalation for labour also shall be paid at the same
quarterly intervals when escalation due to increase in cost of
materials and labour is paid under this clause. If such revision
of minimum wages takes place during any such quarterly
intervals, the escalation compensation shall be payable for
work done in all quarters subsequent to the quarter in which
the revision of minimum wages takes place.
SOUTHERN RAILWAY
PRICE VARIATION
Rx ( I lo ) xP
i) L =
100 xlo
Rx ( W Wo ) xQ
ii) M =
100 xWo
Rx ( F Fo ) xZ
iii) U =
100 xFo
244
P = % of Labour Component
Q = % of Materials Component
Z = % of Fuel Component
The Index Number for the base period will be the Index Number as
obtained for the month of opening of the tender (Technical Bid) and the
quarter will commence from the month following the month of opening of
tender (Technical Bid). The month of opening of 'tender' referred in the
previous sentence shall be replaced by the 'Month of opening of the concerned
negotiated offer' in the event of accepting the tender by the
Provided that this price revision shall not include any changes in
prices resulting from applying Sub-Clause 7012(a) and Sub-Clause 7013(c).
(1) The decrease in the exchange rate of the Dinar shall be not
less than 7% of the basic rate on the date of submission of
tenders.
(e) Paragraphs (c) and (d) above shall not be applied if the Contractor
is paid any portion of his payments if foreign currency.
(f) In case the cost of fuel needed for operation of the Contractor's
Equipment in the Works is increased by a margin exceeding 5% of
the basic cost at the date of submission of tenders, the Contractor, if
the Works comprise a road, water or sewage project shall be
compensated for the differential exceeding the mentioned five
percent ratio according to the formulae set out by the Ministry of
Public Works and Housing.
Adjustment Formulae
RIx(C C o ) XL
V1 =
Co
where,
RIX ( I I 0 ) XG
V2 =
Io
Where,
RIX ( P P0 ) xQ
V3 =
P0
Where,
Po = Base Price of HSD at the fuel depot nearest to the site of the
works at the time specified in clause 70.1 (2) (f)
RIX (m m0 ) XE
V4
mo
Where
0.85RFx ( F F0 )
V5 =
F0
Where,
Sx( M M o ) XT
Vc =
Mc
Where,
Mc = Base cost index for cement / steel which shall be the index
for cement/iron and steel as shown in 'Index Numbers of
wholesale Prices in India - By Groups and Sub-Group
(Month end/year end data) (Base 1981 - 82 = 100), released
by the Office of the Economic Adviser Ministry of Industry,
Government of India prevailing at the time specified in para
F of Sub-Clause 70 3
255
M = current cost index for cement / steel which shall be the index
for cement/iron and steel as shown in the 'Index Numbers of
wholesale Prices in India - By Groups and sub-group (Month
end/year end data)' (Base 1981-82 = 100), released by the
Office of the Economic Adviser Ministry of Industry,
Government of India, relevant to the period in which
cement! steel Is delivered to the site for use in permanent
works as per Sub-Clause 60 3 hereof or is incorporated in
permanent works
(iii) The Contractor shall use due diligence to ensure that excessive
wastage of the Specified Materials shall not occur, Any Specified
Materials removed from the site shall be clear1y identified in the
records required under paragraph (vii) of this Sub-Clause,
(iv) The Contractor shall at all times have regard to suitable markets
and shall whenever buying materials, a variation in the cost of
which would give rise to an adjustment of the Contract Price under
this sub-clause, be diligent to buy or procure the same at the most
economical prices as are consistent with the due performance by
the Contractor of his obligation under the Contract
If at any time there shall have been any lack of diligence default or
negligence on the part of the Contractor, whether in observing the
above requirements or otherwise, then for the purpose of adjusting
the Contract Price pursuant, hereto; no account shall be taken of
any increase in cost which may be attributable to such lack of
256
Ln Mn Fn Bn
Pn = A+b ---- + c --- + d ----- + e -------
Lo Mo Fo Bo
Ln, Mn, Fn, and Bn are the current cos indices of reference prices of
the cost elements of labour, material fuel (diesel) and bitumen in local
currency for month “n’, determined pursuant to Sub – Clause 70.5. L0, M0,
F0 and B0 are the base indices of reference prices corresponding to the above
257
cost elements of labour, material, fuel (diesel) and bitumen at the date
specified in Sub – Clause 70.5.
The base cost indices or prices shall be those prevailing on the day
28 days -prior to the latest date for submission of bids. Current indices or
prices shall be those prevailing on the day 28 days prior to the last day of the
period to which a particular Interim Payment Certificate is related. If at any
time the current indices are not available, provisional indices as determined
by the Engineer will be used, subject to subsequent correction of the amounts
paid to the Contractor when the current indices become available.
258
APPENDIX 3
Numeric
Verbal Scale Explanation
value
1 Equal important to both Two elements contribute
elements equally
3 One is moderately more Experience and judgement
important favor
5 One is strongly more important Strong favor
7 Very strong importance over the Very strong dominance
other
9 Extreme importance over the Indisputable dominance
other
2, 4, 6, 8 Intermediate values Compromise between two
levels
Physics 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Chemistry
Chemistry is strongly preferred than Physics
C14 To identify and evaluate the potential factors that contribute to cost
escalation, major cost components of project has been identified.
According to you, which are the most important component that is
responsible for cost escalation in a project? (Compare your
preference pair wise and tick below)
Cement 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Steel
Cement 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Brick
Cement 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Sand
Coarse
Cement 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9
aggregate
Cement 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Timber
Steel 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Brick
Steel 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Sand
Coarse
Steel 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9
aggregate
Steel 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Timber
Brick 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Sand
Coarse
Brick 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9
aggregate
Brick 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Timber
Coarse
Sand 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9
aggregates
Sand 9 8 7 6 5 4 3 2 1 2 3 4 5 6 7 8 9 Timber
Pair wise comparison scale for each set of major factor category
for cost escalation through Analytic Hierarchy process (AHP) questionnaires
were used and respondents were asked to indicate their pair-wise comparison
scale for individual cost escalation impact. The software named Expert
choice was used for analyzing the AHP responses (Forman et al 1983). As a
general rule (Saisana 2005), AHP responses with in-consistency ratios greater
than 0.15 have not been considered in the analysis. The typical input and
output result is shown below.