IMPORTANCE OF UNDERSTANDING ASPHALT INDEX COST
INCREASES
All paving companies
receive a price from the asphalt plants in January
of each year. It is hard bidding due to the constant
increase in the asphalt and diesel fuel. It is
important to understand how to figure the increases
when a owner of a project is purchasing a asphalt
parking lot. A lot of times we bid work and after a
few months the customer will call and say we are
ready for the job to start. It is important for all
paving contractors to raise costs accordingly. if
material increase and the contractor absorbs the
increases. The contractor will not be able to
operate and will go out of business. Below is a
scenario of the increasing costs and how to monitor
monthly costs.
Example
In January 2006 (Please
see chart) Asphalt Index was $
258.33
Supplier gives contractors tonnage price.
$ 33.50 per ton January
2006 per ton (I-5 Top cost)
In June 2006 Asphalt
Index increases to $ 371.67
June Index: $ 371.67
Jan Index: $ 258.33
(Subtract)
Difference $ 113.34
TAKE $ 113.34 x 5%= $
5.67 DOLLAR INCREASE ABOVE THE $ 33.50 PRICE GIVEN
IN JANUARY 2006
Add $ 33.50 + $ 5.67 per
ton increase= $ 39.17 per ton
Example: If a project
you bid on in January 2006 was taking 1,000 tons of
asphalt. The additional cost would be $ 5,670.00.
The Asphalt plants will not hold pricing. It can
increase at any time. Understand the contractor has
no control over increases.!!!!!
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