Bitumen price rises causing chaos

The rising price of bitumen is putting highways specialists out of business.

Now firms are lobbying for a change in their contract terms from clients to reflect rising oil prices which have pushed the price of bitumen to a 25-year high.

Trade bodies and contractors want to see new price indices used in long-term maintenance contracts and road building jobs to take account of price volatility in raw materials.

Firms are believed to be making losses on long-term deals negotiated when oil prices were lower.

A new set of price fluctuation indices has been developed by the Highways Term Maintenance Association, Civil Engineering Contractors Association and Building Cost Information Services of the Royal Institute of Chartered Surveyors.

The model is being trialled in Cheshire West and Shropshire.

It adjusts raw material costs on a monthly basis and is designed to update the Baxter indices which have been the industry standard for decades.

An HTMA spokesman said: “There was a need to develop the long-standing Baxter Indices so that price adjustments truly reflect actual cost variations incurred during the life of long term highway maintenance contracts.  This benefits both client and service provider,”

Alasdair Reisner, Director of External Affairs at CECA explained, “The last oil price shock in 2008 provided stark evidence that current approaches to inflation adjustment on long-term highways maintenance contracts were not up to the task.”
http://www.eecongress2012.org/