Price Fluctuation Essay

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Price, in terms of money, is considered as a measure of value and as the quantity of money in units of some form of currency which one may buy or sell a commodity (Fetter, 1912).
Ramus and Birchall (1996) recognize the term fluctuation as prices of commodities go up or down, which is random and therefore unpredictable, except in the mean, or on average.
Vamsidha et al. (2014) price escalation is defined as changes in the cost or price of specific goods or services in a given economy over a period and is a similar to the concepts of inflation and deflation except that escalation is specific to an item or class of items. But Doe (2007) identifies escalation as the provision in a cost estimate for increases in the cost of equipment, material, and labour.
According to the above definition, Price fluctuation can be identify as an …show more content…

If;
Cumulative value of work done up to current valuation = Vc
Cost of material at site on current valuation = Mc
Cumulative value of work done up to previous valuation = Vp
Cost of material at site on previous valuation = Mp
Then;
Valuation of work done for the period concerned = (Vc+Mc)-(Vp+Mp)
Cost adjustment factor (To convert contractor’s price to contractor’s cost) = K%
Input not listed for price adjustment under the contract rest (Inputs which are not directly considered for the formula, but are computed indirectly) = R%
Input percentages (The percentage cost contribution of major materials, labour and plant and equipment to the contract) = Px
Current variation = V
Non-adjustable element = Vna
Amount of the claim that should be subjected to price adjustment = V-Vna
Contractor’s cost (Expenditure) within the amount

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