As mentioned in Sections 3.2(a) and 16.8 contracts extending over a lengthy period of time may incorporate a price variation clause under which the contractor is entitled to receive reimbursement of extra costs caused to him by inflation of prices for labour, materials and plant since the date of his tender.
The amount due to him under this clause can be calculated according to a formula incorporated in the contract conditions, or by direct examination of the contractors wages sheets and invoices received by him for materials or hire of plant.
If a formula is used, this will be re-calculated each month; hence a file of the price indices used for such a formula is necessary. However, if more rarely the price increase has to be calculated by reference to the contractors wages sheets and invoices, a separate filing system for the extensive calculations involved will be necessary.
A file of basic costs at time of tender will be needed; another for wage increase calculations, and another for materials and hired plant. When invoices showing price increases are submitted, a check needs to be made to ensure that the invoiced quantity of materials shown on the invoice has been used on the job. For materials such as cement, aggregates, reinforcement, or fuel (for plant), a running total of quantities delivered as shown on the invoices must be kept to ensure the total does not exceed the possible use on the job. All invoices must be marked Seen and initialled before return to the contractor, who must be instructed to file and keep them in case the employers auditors wish to check the assessment of the price increases certified.