Understanding the Asphalt Cost Index

How to figure price increases

Example:

1. Contractor bid project in January of 2009

2. Price: Asphalt Index @ $417.50

3. In March of 2009 you chose to pave project

4. March 2009: Asphalt Index @ $367.50

5. Ask contractor to put total tons needed on proposal

6. Example 1,000 Tons of Asphalt needed for project

7. Example Project Cost: $125,000.00

Calculation:

January 2009 Index $417.50

March 2009 Index: $367.50

Difference of: $50.00

Calculate $50.00 X 5 % $2.50 per ton decrease

(5% is amount of Asphalt used in 1 ton of material)

 

Tons Needed on Project: 1,000 Tons @ $2.50= $2,500.00

Job decreased by $2,500.00

 

Project Cost: January 2009: $125,000.00

Asphalt decrease $2,500.00

Total Increase ($2,500.00) $122,500.00

 

Since August 2008 asphalt was at the highest its ever been.

Since August asphalt index has been decreasing.

 

IF ASPHALT INDEX RAISES INSTEAD OF DECREASING IT WILL INCREASE $ 2,500.00
 

 

CLICK HERE FOR THE CURRENT ASHALT PRICE INDEX