Price adjustment factors from March 1991 prices to money of the day (MOD) prices
In our
For March 1991 prices to be converted to MOD prices, we need to take into account the forecast trend of increase in the construction sector price index between March 1991 and the time of forecast payments. calculations, we assume that -
(a) price increases in the construction sector will be as follows -
(b)
Calendar year
8% for 1991 (actual),
11% for 1992-96, and
7% for 1997-2000; and
the average payment date will be mid-financial year i.e. late September.
For example, to reach September 1991 prices, we adjust the estimates at March 1991 prices upwards for six months of inflation- i.e. by 1.04.
i.e. by 1.04. To reach September 1992 prices, we further adjust the estimates at September1991 prices upwards for another 12 months of inflation (three months in 1991 at 8% and nine months in 1992 at 11%) - i.e. by 1.1466. Accordingly, the price adjustment factors to calculate MOD for successive years are as follows -
Prior to
FY 1991-92
Beyond
FY 1991-92
FY 1992-93
FY 1993-94
FY 1993-94
FY 1994-95
FY 1995-96
FY 1996-97
Price adjustment
1.00
1.04
1.15
1.27
1.41
1.57
1.74
1.88
factor
(from March
1991 prices)
(Rounded)
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14:04 INT L BECHTEL INC