A study on Improving Price Adjustment Administration in Federal Road Projects
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Date
2021-06-01
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Addis Ababa University
Abstract
The degree of price variations referring to each specific type of construction shall be measured by
specific price indices, in order to achieve more accurate results. In Ethiopian Road Authority, Price
Index is commonly used for price adjustment administration in the escalation of road construction
costs. This study aims to improve price adjustment administration in federal road projects. The
objectives of the study report in this thesis are assessing current price indices determination practice
when original source cease to publish indices, assessing reliable sources to minimize ceasing of
publishing indices and developing guideline for price adjustment administration system when
supplier cease to exist and replaced by new source. This research covered, the studies on improving
price adjustment administration in federal road projects. Moreover, price adjustment administration
when suppliers cease to published price indices were analyzed by trend, T-tests and regression
analysis techniques, to obtain models to predict the future values of the new sources of indices,
which was a way enabling the prediction of the future indices of a price adjustment in federal road
projects. Using a detailed literature review, a quantitative data collection approach, data was
collected from Ethiopian Road Authority payment certificates, to see the trend of price adjustments
of key construction cost inputs (cement, bitumen, fuel and steel), National Bank of Ethiopia’s
website (currency exchange ETB to USD) and different local and international road construction
material suppliers’ websites. In this thesis, some descriptive statistical methods have been used for
the analysis of Three DB case study projects that are completed under RSDP IV. The projects are
Chole magna, Dire Dawa- Dewelle and Pawi-Junction. The result is analysed using trend, T-test and
regression analysis methods. The analysis resulted that, NOC should be used as a new source for
Chole magna and Dire Dawa-Dewelle projects. Producer Price Index (PPI); Petroleum from Bureau
of Labour Statistics (BLS) U.S should be used for Pawi Junction-Fendkia-Ayma project. Finally,
based on the analysis of the results, this research developed guideline to enable professionals to
determine the new source of index using a common guideline and help to create common
understanding.
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Keywords
Price Adjustment, Price Index Construction Price Index and Supplier cease to published price index.