Price Escalation and Adjustment: How Reimbursements for Construction Materials Differ Among U.S. Departments of Transportation
Price adjustment clauses (PACs) are an effective means to minimize risk when fluctuating material costs create budget overruns in transportation construction projects. PACs for fuel and asphalt are available in most departments of transportation (DOTs) throughout the U.S. PACs for steel and Portland cement/concrete are less common. Price adjustment formulas for each construction material differ from state to state and produce a range of reimbursements. The purpose of this study is to compare the different formulas used by the DOTs and evaluate how these formulas and associated policies, such as trigger value and inclusion or exclusion of the price difference below the trigger value, influence the price adjustments. Scenario analyses are performed for three construction materials: fuel, asphalt, and steel. The results indicate that the most critical factors affecting price adjustment are fuel adjustment factors, trigger values, minimum requirements, and inclusion/exclusion of the price difference when the trigger is reached.
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Corporate Authors:
500 Fifth Street, NW
Washington, DC United States 20001 -
Authors:
- Brown II, Larry R
- Pierce, Charles
- Huynh, Nathan N
- Starcher, Ryan
- Guimaraes, Paulo
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Conference:
- Transportation Research Board 90th Annual Meeting
- Location: Washington DC, United States
- Date: 2011-1-23 to 2011-1-27
- Date: 2011
Language
- English
Media Info
- Media Type: DVD
- Features: Figures; References; Tables;
- Pagination: 24p
- Monograph Title: TRB 90th Annual Meeting Compendium of Papers DVD
Subject/Index Terms
- TRT Terms: Asphalt; Building materials; Construction; Contracts; Formulas; Fuels; Prices; Risk analysis; State departments of transportation; Steel
- Uncontrolled Terms: Price adjustment
- Subject Areas: Construction; Finance; Highways; I10: Economics and Administration; I50: Construction and Supervision of Construction;
Filing Info
- Accession Number: 01334250
- Record Type: Publication
- Report/Paper Numbers: 11-3630
- Files: TRIS, TRB
- Created Date: Mar 28 2011 7:45AM