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Price Adjustment

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Price adjustment Formula
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  Section IX. Contract Forms CF-10 Appendix 2. Price Adjustment Where the Contract Period (excluding the Defects Liability Period) exceeds eighteen (18) months, it is normal procedure that prices payable to the Contractor shall be subject to adjustment during the performance of the Contract to reflect changes occurring in the cost of labor and material components. In such cases the Bidding Documents shall include in this Appendix 2 a formula of the following general type, pursuant to GC Sub-Clause 11.2. Where Contracts are of a shorter duration than eighteen (18) months, the following  provision shall not be included. Instead, it shall be indicated under this Appendix 2 that the prices are to remain firm and fixed for the duration of the Contract. This Appendix 2. Price Adjustment shall be the same as the Price Adjustment Form in Section IV, Bidding Forms of the Bidding Documents. The formula, indices and coefficients shall be agreed at Contract Negotiations between the Employer and the awarded Contractor. Sample Price Adjustment Formula Prices payable to the Contractor, in accordance with the Contract, shall be subject to adjustment during performance of the Contract to reflect changes in the cost of labor and material components, in accordance with the following formula: PPab L Lc M  M P 10 10100      () in which: P 1  = adjustment amount payable to the Contractor P 0  = Contract Price (base price) a  = percentage of fixed element in Contract Price ( a  = %) b  = percentage of labor component in Contract Price ( b  = %) c  = percentage of material and equipment component in Contract Price ( c  = %)  L 0 ,  M  0  = labor and material/equipment component indices or reference prices in the country of srcin on the Base Date  L 1 ,  M  1 = labor and material/equipment component indices applicable to the appropriate industry in the country of srcin on the date of adjustment, for adjustments related to Plant and components supplied under Schedules No.1, No.2 and  No.3; and, in case of adjustment for Installation Services provided under Schedule No.4, indices or reference prices applicable to the appropriate industry in the country of srcin on the month the Installation Services were  provided.  N.B. a+b+c= 100%.  Section IX. Contract Forms CF-11 [ The Bidder shall propose the coefficients b and c in its Bid. The formula, including all coefficients, shall be determined and finalized at Contract negotiations. ] Conditions Applicable To Price Adjustment The Bidder shall indicate the source of labor and materials indices and the base date indices in its Bid. Item Source of Indices Used Base Date Indices The base date shall be the date twenty-eight (28) days prior to: [ insert “ the Bid submission deadline” or   “the submission deadline for Second Stage Bids”  , as appropriate ]. For Plant or components supplied under Schedules No.1, No.2 and No.3, the date of adjustment shall be the mid-point of the sequences shown in the Program of Performance submitted by the Bidder, pursuant to GC 18.2, for design or manufacture of the Plant or components. In respect of Installation Services provided under Schedule No.4, the adjustment shall apply to the monthly measured value of work performed by the Contractor during the preceding month. The adjustment shall be made monthly to the payments for Installation Services effected as  provided in Appendix 1 of the Contract Agreement. The following conditions shall apply: (a) No price increase will be allowed beyond the srcinal delivery date unless covered by an extension of time awarded by the Employer under the terms of the Contract. No price increase will be allowed for periods of delay for which the Contractor is responsible. The Employer will, however, be entitled to any price decrease occurring during such  periods of delay; (b) If the currency in which the Contract Price, P 0 , is expressed is different from the currency of the country of srcin of the labor and/or materials indices, a correction factor will be applied to avoid incorrect adjustments of the Contract Price. The correction factor shall correspond to the ratio of exchange rates between the two currencies on the  base date and the date for adjustment as defined above; and (c) No price adjustment shall be payable on the portion of the Contract Price paid to the Contractor as an advance payment.
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