17-CPI-U Based Price Adjustment Calculations.pdf
PDF 13 KB Posted
- Attached to
- ITB – Installation and Modification of Traffic Signal Systems and Related Improvements for Harris County
- Solicitation number
- 25/0278
- Issued by
- Harris County, Texas
About this file
This document is a detailed explanation of CPI-U (Consumer Price Index for All Urban Consumers) based price adjustment calculations for contract renewals, specifically for the Houston, Texas area. The document outlines a systematic approach for determining price adjustments in contract renewal years by using the average inflationary or deflationary effects as reported by the U.S. Bureau of Labor Statistics (BLS). The calculation method involves analyzing six consecutive twelve-month periods prior to contract expiration, with specific attention to the timing and calculation of these periods.
The pricing adjustment methodology uses the CPI-U, which covers approximately 80 percent of the total population, including wage earners, clerical workers, professionals, managers, technical workers, self-employed individuals, retirees, and others not in the labor force. The calculation process involves totaling and averaging the inflationary/deflationary effects from six periods, with the intention to determine contract renewal pricing. The document provides a detailed example for a contract expiring in November or December 2008, demonstrating how the six periods are selected and calculated, with each period spanning different months and years to provide a comprehensive view of price changes.
View the file
Other files
Show all 17
On GovTribe
Work with this file
- Download the original file
- Contacts named in this file
- Similar government files
- Ask GovTribe AI about this file
Text version
CPI-U Based Price Adjustment Calculations
CPI-U Based Price Adjustment Calculations
For any year in which a current contract is renewed, the renewal year pricing will be determined by adjusting the current contract year pricing by the average inflationary/deflationary effect, as reported in the Consumer Price Index of All Consumers (CPI-U) for Houston, Texas, between the current contract year as compared to the year preceding the current contract year of the contract. The CPI-U, as published by the U.S. Bureau of Labor Statistics (BLS), is a measure, over time, of the average change in prices in a fixed market basket of goods and services and covers approximately 80 percent of the total populations, including wage earners, clerical workers, as well as groups such as a professional, managerial, and technical workers, the self-employed, retirees and others not in the labor force.
The average inflationary/deflationary effect will be determined by totaling, and dividing by six (6), the inflationary/deflationary effects of six (6) twelve (12) month periods occurring prior to expiration of the current contract. Since the inflationary/deflationary effect for the Houston area is calculated by the BLS every other month beginning in February, and since the intention to renew a contract should be determined in the eighth month of the contract, all required data for calculating the average adjustment rate need be current only five (5) or six (6) months prior to the scheduled expiration of the current contract.
For example, assuming a contract expires in November or December, the end of the most recent twelve (12) month period will be June of the year of the current contract. The end of each of the other five (5) twelve (12) month periods will be the second month before the end of the immediately preceding twelve (12) month period.
Therefore, the six (6) twelve (12) month periods applicable to a contract expiring in November or December, 2008, are:
Period #: 1 2 3 4 5 6
From: 6/07 4/07 2/07 12/06 10/06 8/06 To: 6/08 4/08 2/08 12/07 10/07 8/07
Period #1 is from June of the first year before the contract period to June of the year of the contract period, Period #2 is from April of the first year before the contract period to April of the year of the contract period, Period #3 is from February of the first year before the contract period to February of the year of the contract period, Period #4 is from December of the second year before the contract period to December of the first year before the contract period, Period #5 is from October of the second year before the contract period to October of the first year before the contract period, Period #6 is from August of the second year before the contract period to December of the first year before the contract period.
File details come from the government source that posted it. Updated .