« Safety For Contractors | Main | NHQ - Handbook For Winning »

Construction Material Escalation Management (Great Idea!)

Barry Kindt of SECCO Inc. had a great column in this month's IEC Insights magazine with an interesting strategy on dealing with pricing of material escalation for contractors.

Unfortunately IEC does not have an online version available but the basic strategy was to update one of the user fields in your estimating database to include the weight in pounds for various materials - copper, steel, aluminum, etc.

This will take some work to do up front looking to see how much say #12 THHN copper wire weighs per foot and setting up the database but after this exercise is complete you can then summarize your bid based on X Pounds of metals.

Once you get your pricing complete you can then add a clause to your scope that says something similar to:

"Our bid is based on a copper (steel, aluminum, etc) price of $ ##.## per pound based on the price listed in the Wall Street Journal as of the date of this proposal. We have listed the weight as a point of reference only. When actual procurement takes place a additive or deductive change order will be processed based on this weight and the price of materials at that point in time."

I really wish we could provide a link to the full article but this is such a good idea that it just has to get out there. Hope you find it helpful.

Posted by David on August 31, 2006 05:32 AM|Permalink

TrackBack

TrackBack URL for this entry:
http://www.dbrownonline.com/mt/mt-tb.cgi/139