There is currently only one published tender price index available in South Africa
for use by built-environment practitioners. The purpose of this article is to report
on an investigation into the nature of a more recent tender price index.
A literature study was conducted to examine the theory of indices in order to
establish which type of index as well as which formula would be appropriate
for use in South Africa. Thereafter, the priced bills of quantities of a selected
number of projects were analysed in order to identify representative indicator
items as well as the weighting thereof for an index. Thirty-two indicator items
were identified that could be used for calculating an index. In addition, sourced
priced bills of quantities for a number of projects over a six-and-a-half year
period were analysed to calculate average rates for the 32 selected indicator
items. These rates, together with the established weightings of items, were used
to calculate an index.
The main finding that emerged from the research was that, by using the above
methodology, an alternative tender price index could be determined for use
by the South African building industry.