What is price escalation under Clause 10CC?
Clause 10CC is the price variation clause of the central government's General Conditions of Contract. Every quarter it adjusts the payment for work done by the change in published indices — cement, steel, labour wages, other materials, diesel and bitumen — since the tender, in proportion to each one's share of the work.
This sheet follows the clause as published in the General Conditions of Contract 2023, where cement, steel, diesel and bitumen sit inside Clause 10CC with their own components.
What is in the price escalation workbook?
- Contract & Base — agreement particulars, the letter-of-commencement month, the components from Schedule F, the base indices and the share of work escalated.
- Monthly Indices — one row per month from the month after commencement, numbered into quarters.
- Escalation — one row per quarter: the cost of work, W, the average indices, each component's variation and the escalation for the quarter.
- Filled Sample — three quarters of a building contract with illustrative index values.
How does the price escalation sheet calculate?
- Cost of work: C = gross value of work up to this quarter − up to the last; F = secured advance paid − recovered in the quarter; I = advance payment made − recovered; J = amounts paid at market rates under Clause 12. M = C + F + I − J, and W = 0.85 × M.
- Escalation for the quarter: VW = W × 1/100 × [CP × (CI − CO)/CO + LP × (LI − LO)/LO + CMP × (CMI − CMO)/CMO + EMP × (EMI − EMO)/EMO + FP × (FI − FO)/FO + SP × (SI − SO)/SO + BP × (BI − BO)/BO]. In the maintenance period cement, diesel and steel drop out.
- Quarterly indices are the average of the three calendar months, or of fewer months for a short last period. LI is the minimum wage on the last day of the previous quarter.
- The first quarter is the three months after the month in which the letter of commencement was issued, and each quarter after it the next three.
- A fall in an index gives a negative variation, which is recovered from the contractor.
Worked example from the sample sheet, with illustrative indices: in the first quarter, gross work of Rs. 1,20,00,000 plus Rs. 6,00,000 of net secured advance, less Rs. 2,00,000 paid at market rates, gives M = Rs. 1,24,00,000 and W = Rs. 1,05,40,000. Labour adds Rs. 74,035.76, civil materials Rs. 79,050 and cement Rs. 25,944.62, while a fall in the steel index takes off Rs. 39,525. The quarter's escalation is Rs. 1,47,234.71, payable.
How do you use the price escalation template?
- On Contract & Base, enter the month of the letter of commencement, the component percentages from Schedule F and the base indices for the month of the last date of receipt of tender.
- Each month, enter the published index for every component your contract uses on Monthly Indices.
- For each quarter, enter on Escalation the gross value of work up to the quarter, the advances paid and recovered, and anything paid at market rates under Clause 12.
- Enter LI, the minimum wage of an unskilled adult mazdoor on the last day of the previous quarter.
- Read the escalation for the quarter and the Check column, and mark maintenance-period quarters.
What should you check before relying on the price escalation?
- Contracts on earlier conditions, or other departments' conditions, may use a different formula, components or indices. Older contracts kept cement and steel in a separate clause.
- No indices are supplied. Use the indices your contract names, as published; the values on the Filled Sample are illustrative, not published figures.
- The components must add up to 100%, as in the Schedule F table, and the 0.85 share is the clause's figure — change it only if your contract does.
- Escalation is for work done within the stipulated period and any justified extension. Which indices apply to work done after that is the Engineer-in-Charge's decision.
What does each column mean?
| Column | What goes in it |
|---|---|
| Components (CP, LP, CMP, EMP, FP, SP, BP) | Each component's share of the total value of work from Schedule F of the agreement: cement, labour, civil materials, E & M materials, diesel, steel and bitumen. |
| Base Indices (CO, LO, CMO, EMO, FO, SO, BO) | The indices for the month of the last date of receipt of tender, and the minimum wage on that date. |
| Monthly Indices | Each component's published index for each month, numbered into quarters from the month after the letter of commencement. |
| (A) to (J) | Gross value of work up to this quarter and up to the last, secured advance and advance payment paid and recovered, and amounts paid at market rates under Clause 12. |
| M and W | Auto-calculated. M = C + F + I − J, and W = 0.85 × M — the cost of work on which escalation is payable. |
| LI | The minimum wage of an unskilled adult mazdoor on the last day of the previous quarter — the higher of the central and local notified wage. |
| Average Indices | Auto-calculated. The average of the quarter's monthly indices for each component. |
| Variation by Component | Auto-calculated. W × component share × (quarter index − base index) ÷ base index. |
| VW: Escalation for the Quarter | Auto-calculated. The sum of the components: positive is payable, negative is recovered. Withheld with INDEX MISSING if a used component has no index. |
| Check | Auto-calculated. Components not adding up to 100%, a gross value below the last quarter's, a missing LI, or fewer than three months of indices. |
Escalation is worked out on the bills paid in each quarter, so the gross values come from the RA bill format in Excel. It is paid for work within the stipulated period and justified extensions, which the hindrance register supports.
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