The formula
Contract price adjustment moves the adjustable part of a payment with a published cost index. The standard formula holds back a fixed portion (x, usually 15%) that never escalates: escalation = amount × (1 − x) × (current index ÷ base index − 1).
The base month is set in the contract data, usually the month before tenders closed. The indices come from Statistics South Africa's contract price adjustment provisions (P0151.1), by work group.
Where the indices come from
Pick a series to fill the index values from Sakhani's index library where it holds them, or type the values from the Stats SA table yourself. The result shows which values were used.
Worked example
R1 000 000 of work valued this month, a base index of 100.0 and a current index of 110.0 give a ratio of 1.10. With the 15% fixed portion, the escalation is 0.85 × 10% = 8.5%, which is R85 000.