APC has been involved with the TQI subcommittee for Supply Chain and Material Escalation. PennDOT and the Turnpike initially asked the Industry for a top 10 list of items that were difficult to secure or had increased significantly during the pandemic. The industry responded that we cant provide just a top 10 list, this list can vary from week to week or job to job. We suggested that they provide more items on the stored materials list, provide temporary items for stored materials and or raw materials to be secured and utilize COVID funds to purchase/secure materials for contracts or look into how Florida DOT has done their Material Price Adjustments (MPA). They had also brought up to us about requiring all contracts to have the steel escalation included. Industry responded that we were high in disfavor of this idea moving forward.
At the meeting on Monday, March 21st the Department provided us with the Master List of items for Stored Materials. We were asked to review this list for the next meeting in two weeks. If you see items you feel should be added to this list please email Aaron Hoover (email@example.com) before April 1st which is our next Industry meeting.
FLORIDA DOT – ESCALATION APPROACH
We have issued 2 DCE memos (22-03 and 22-04) to provide for material price adjustments (MPA): one for steel guardrail and one for aluminum, PVC, and copper. We structured these adjustments similar to our standard fuel and bit adjustments and a previous steel adjustment memo from 2004. Attached to each DCE memo is a specification that will be incorporated into the contract by SA, if the contractor opts into MPA. Since we are adjusting based on the bid unit price, we worked with industry to establish a factor for the material portion of each pay item unit price.
We provided for an adjustment for the steel tariff in 2018 based on splitting the actual cost impact 50/50 with the contractor. This required us to look at all material quotes and invoices for applicable pay items. This was very cumbersome for our contractors and staff, so we agreed to do material price adjustment by index this time around. We are adjusting for the difference between the index at bid and the index at purchase (invoice date). We researched which indexes to use and decided to use the USDOL Bureau of Labor Statistics PPI since it is free and used by other states for material adjustments.
- Guardrail / https://beta.bls.gov/dataViewer/view/timeseries/WPU101702
- Aluminum / https://beta.bls.gov/dataViewer/view/timeseries/PCU3313–3313–
- PVC / https://beta.bls.gov/dataViewer/view/timeseries/PCU3359323359324
- Copper / https://beta.bls.gov/dataViewer/view/timeseries/WPU10230101
We anticipate a memo for reinforcing and stranded steel coming out this month; followed by structural steel soon after. We plan to use the same PPI as guardrail for these items.
Our MPA website is where you can find our MPA certification spreadsheets, as well as the monthly indexes.