Analysis of Producer Price Index as an Adjustment Index

摘要

The predominance of costs associated with highway construction projects are related toequipment and materials. Thus, highway projects are more susceptible to difficulties in successfulcompletion and possible litigations caused by price fluctuations of certain commodities such as oil,steel and cement. The predominant use of unit price contracting allows for little flexibility whenaddressing dramatic price fluctuations of construction materials. In order to reduce the risk ofexposure to significant changes in material costs for contractors, State Highway Agencies (SHAs) havebegun implementing price adjustment indices. However, most of these indices, at this stage, still areill-defined because there are no reliable benchmarks available to measure possible benefits since theoptimal extent of usage of these indices has not been studied. In this paper, the use of the ProducerPrice Index (PPI) is analyzed as a price adjustment index for application to highway projects incomparison to the use of fuel index by the Florida Department of Transportation (FDOT).