PAFI Case Study: Crossrail

Price Adjustment Formulae Indices

The Formulae method of calculating fluctuations in contracts was introduced in 1973 in response to a request from the industry to provide a ‘speedy yet credible’ way of calculating and reimbursing fluctuations. The method relies on resource cost indices for trades and individual resources.

Crossrail Case Study

Crossrail is one of the biggest transportation projects in Europe, representing the new high frequency, convenient and accessible railway for London and the South East.

This paper reports on Crossrail’s (CRL) procurement strategy to award a number of delivery contracts where the employer takes on the risk associated with inflation by letting NEC3 contracts including the secondary option X1. These contracts use the Price Adjustment Formulae Indices (PAFI) to identify the impact inflation, measured against the contract base date, and to periodically change the contract ‘Total of the Prices’ by way of a Price Adjustment.