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Abstract
The Contract Price Adjustment Provisions (CPAP), also known as the Haylett formula, serve to adjust the contract sum of a building contract during the building period by means of monthly work group indices, thereby compensating the contractor for or recovering from him, on an average regional basis and not necessarily on a specific building contract, any fluctuation in his prices of labour, material and plant after submission of his tender.
Since 1978 the average annual rise (February to February) of the above-mentioned work group indices has constantly been greater than 12% and, in 1982/83, even reached 22,3%. The pre-estimation of and reporting on the CPAP compensation have therefore become of vital importance to the employer.
The research concentrated on establishing a statistically-based arithmetical method to which the fluctuations in the work group indices, as predicted by others, may be applied in order to pre-estimate the CPAP compensation.
A statistically-based formula was devised by means of which the building cost may be employed to pre-estimate the building period applicable to different building groups.
A statistically-based formula was also established whereby the construction cash flow of different building groups may be pre-estimated. Specific attention was given to pre-estimating the construction cash flow of those sub-sections of the building work which have other "base months" than does the main contract.
A method was developed to adjust progressively and more realistically the estimated construction cash flow during the planning and building period of a building project as and when firm information becomes available and/or circumstances change.
An arithmetical method was developed, by means of which the predicted work group indices may be applied to the pre-estimated construction cash flow, thereby pre-estimating and adjusting the CPAP compensation.
The research also produced a statistically-based method by which the progress of the building work may be monitored.