PA P E R S

ȍ
                 

assist with the provision of accurate infrastructure asset valuations. In

ǧ Ȏ
                    

many cases infrastructure asset valuation data or the unit rates derived
ǧ from pre-existing infrastructure costing data that is available tends be
                     


    

historic. This presents a challenge in terms of the alignment between

the age of the valuation data and the age of the infrastructure being
evaluated, due to the effect of inflation on the buying power of money.
HMS Belmonte There are several measures or inflation rates that can be utilised to
reflect this erosion in the purchasing power of money. The most com-
Aurecon, Lynnwood Bridge Office Park, 4 Daventry Street, monly used measure for price inflation is the Consumer Price Index (CPI)
Lynnwood Manor, 0081; which is usually calculated as a measure of the average change over
E-mail halbelmonte@aurecongroup.com time in the prices paid by urban consumers for a market based basket
of consumer goods and services. Another measure is the Producer Price
ABSTRACT Index (PPI) which measures the average change in prices received by
Municipalities are under a legislative imperative to compile asset reg- domestic producers for their output. However, since municipal infra-
isters that account for all their assets and provide accurate annual structure is created through civil engineering works, the infrastructure
valuations of their assets, in particular their infrastructure assets. It is will be not representative of the typical goods and services that an av-
also considered best practice for municipalities to prepare infrastruc- erage ‘urban consumer’ uses nor the average price of the national pro-
ture asset management plans. The need to value infrastructure assets duce output. Thus, using the CPI or PPI as measures for determining the
and specifically to determine the asset current replacement cost has value of municipal infrastructure is not ideal as these indices will not be
increased significantly in the recent past. The determination of asset representative of the civil engineering construction industry.
replacement cost would ideally be determined from historic cost data This paper outlines an approach for utilising the Contract Price Adjust-
at every instance. However, given the lack of historic cost data and the ment formula, that is used in the construction industry and in particular
effort required to collect and analyse this data, it is often more effective in civil engineering construction to compensate contractors for the es-
to extrapolate the value from previous estimates with the allowance calation in costs over time, for escalating and de-escalating the value of
for a suitable escalation that is more representative than the global municipal infrastructure assets. As the Contract Price Adjustment (CPA)
Consumer Price Index (CPI) within the municipal infrastructure/finance is widely accepted in the civil engineering construction industry and is
sphere. This paper presents a simple tool that was developed to esca- an effective measure of cost escalation (i.e. inflation), it would thus pro-
late and deescalate infrastructure values based on the various Contract vide a more representative measure of the expected escalation and de-
Price Adjustment Factors. escalation in costs of municipal infrastructure. The approach presented
in this paper provides a tool that can be used to update infrastructure
INTRODUCTION values based on a rational assessment of data provided by the South
Municipalities in general are infrastructure intensive organisations that African Statistical Service that avoids the huge costs associated with
are dependent on their infrastructure assets to deliver the services re- maintaining and updating a database of infrastructure costs and with-
quired to meet the needs of the people in the communities they serve. out having to go back to first principles every year.
In order to effectively manage their infrastructure, Municipalities need
to have a good understanding of the value of their assets. This is impor- 2. APPROACH
tant for service delivery as the value of the infrastructure assets tends to 2.1 Introduction
form the basis for determining the operations and maintenance budg- Most engineering construction based contracts contain provisions for
ets which directly contributes to the levels of service that the munici- adjustments to changes in cost (i.e. price escalation) utilising a price ad-
pality can provide through their infrastructure. justment formula to take into account the increases or decreases in the
Under the Municipal Finance Management Act of 1999 No.56 of 2003, costs of labour, equipment, plant, material and fuel over the period of
municipalities are required to account for their assets in compliance the contract. It is the general practice that the client of the works speci-
with Generally Recognised Accounting Practice (GRAP). Most munici- fies the exact formula that is used for the contract; however standard
palities provide services to their communities by means of their infra- formulae for determining the escalation have been developed, in South
structure assets that account for the largest portion of the value of all Africa by: the South African Institution of Civil Engineering (SAICE),
their assets on their balance sheet, which is prepared as part of the South African Federation of Engineering Contractors (SAFCEC) and the
annual financial statements that are audited by the Auditor General. Steel and Engineering Industries Federation of South Africa (SEIFSA),
Where depreciated replacement cost is used as a valuation methodol- and internationally by the FédérationInternationale Des Ingénieurs-
ogy, the determination of the current replacement cost is a critical step Conseils (FIDIC), French for the International Federation of Consulting
in the valuation. The determination of the current replacement cost is Engineers.
also essential for the preparation of asset management plans that have The approach followed in this paper utilises the formula developed by
been advocated as best practice in South Africa. the SAICE for determining the price escalation for construction works.
The challenge with valuing infrastructure assets lies in the availability,
or more accurately, in the lack of availability of accurate costing data 2.2 The Formula
for the broad spectrum of infrastructure assets that are typically owned The formula accepted and approved for inclusion in the General Condi-
by municipalities. Ideally, first principal modelling could be utilised to tions of Contract for Construction Works (SAICE 2010), is based on the
determine the valuation of infrastructure assets, but the time and data Haylett Formula for escalation, which has been adopted by the industry
requirements for implementing this approach are onerous which tends and it has been accepted by SAICE, Construction Industry Development
to make the costs associated with this approach prohibitive. Unfortu- Board (CIDB) and SAFCEC. The expression utilised by SAICE to calculate
nately there is no national database or methodology in place that can the Contract Price Adjustment Factor (fCPA), is presented in Equation 1.

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(1) Where: Index, the Plant Index, the Materials Index, the Fuel Index along with
• “x” is the proportion of the contract value that is not subject to adjust- the weighting coefficients (for labour, contractor’s equipment, materi-
ment (i.e. the fixed portion), and unless stated otherwise in the con- als and fuel) must first be determined. This section details how each of
tract the fixed proportion will be 0.10 or 10%. Thus the portion that the required indices and coefficients are determined, then utilised to
will be subject to adjustment is 0.9 or 90% of the contract/claim value. calculate the CPA.
• “a”, “b”, “c” and “d” are the coefficients contained in the contract which
are deemed, irrespective of the actual constituents of the work, to 3.2 The Indices
be representative of the proportionate value of labour, contractor’s 3.2.1 Introduction
equipment, materials (excluding specialist materials which must be The indices for the Labour Index, Plant Index, Materials Index and Fuel
separately stipulated in the contract) and fuel respectively. The arith- Index are taken from the Statistical News Releases P0141 and P01421,
metical sum of “a”, “b”, “c” and “d” must be equal to unity. Thus these co- which published by Stats SA on a monthly basis (Stats SA 2012).
efficients are effectively weighting factors that account for the propor- The first consideration that needs to be taken into account is that Stats
tion of the labour, plant, material and fuel values of the construction SA calculates the CPI and PPI on a base year and every few years they
works being carried out. change the base year. The base year for the CPI at the time this study
• “L” is the Labour Index, the value for which is taken as the CPI for labour was conducted was 2008, previously it was 2000 and before that it
in the province where the work is to be carried out as published by Sta- was 1995. Stats SA provides a conversion factor to change the indices
tistics South Africa (Stats SA) in their Statistical News Release P0141.1. from the current base year to the equivalent indices for the previous
• “P” is the Plant Index, the value for which will be taken as the Producer base year. As we would like to determine the change from 2001 on-
Price Index for Civil Engineering Plant as published by Stats SA in Table wards, it was decided to use the year 2000 as the base year for the CPI
12 of their Statistical News Release P0142.1. in this study.
• “M” is the Materials Index, the value for which will be taken as the Civil This means that for the CPI we would need to utilise the conversion
Engineering Producer Price Index for materials as published by Stats factor to convert the newer CPI indices from the 2008 base year (where
SA in Table 11 of their Statistical News Release P0142.1. 2008 = 100) to the 2000 base year (where 2000 = 100).
• “F” is the Fuel Index, the value for which will be taken as the Producer Presented in Table 1 is the conversion factor for determining CPI In-
Price Index for Diesel at wholesale level for the area where the contract dices for the nine provinces from the 2000 base year (where 2000 =
is being carried out as published by Stats SA in Table 12 of their Statisti- 100) to the 2008 base year (where 2008 = 100), where the provinces are
cal News Release P0142.1. listed by their initials.
For “L”, “P”, “M” and “F” the suffix “o” denotes the base indices applicable
to the base time frame (month or year) that will be utilised in the de- Table 1: Conversion Factor for Determining the CPI Indices from the
termination of the fCPA, and the suffix “t” denotes the current indices 2008 Base Year to the 2000 Base Year
applicable to the future time frame (month or year) that will be utilised
in the determination of the fCPA.
The price adjustment amount is determined by multiplying the origi-
nal applicable/relevant amount by the fCPA. In summary the expres-
sion in Equation 1 provides a multiplication factor to adjust what the
contractor is paid for, to reasonably account for the effects of inflation
that occur within in the civil engineering construction industry over
the period of the contract. Hence the formula in Equation 1 provides
an effective inflation adjustment mechanism for the civil engineering
construction industry that can be calculated based on published CPI
and PPI indices that are germane to the civil engineering construction
industry. Considering that the current replacement cost value of any
given municipal asset needs to be representative of the cost that would
be incurred if that same asset had to be constructed in the same lo-
cation to provide the same service, utilising the CPA to determine the
escalation in value of municipal assets due to inflation would provide a
more representative measure than simply scaling the municipal asset
value by CPI or PPI rate. Utilising the fCPA, in Equation 1 it is thus pos-
sible to determine the multiplication factor (i.e. the percentage change) Presented in Table 2 is an example of how the conversion factor for
for adjusting the value of municipal infrastructure to accommodate determining CPI Indices from one base year to another, for the 2000
for inflation. base year to the 2008 base year (and visa-versa). In effect to convert a
CPI index from the 2008 base year (where 2008 = 100) to the 2000 base
3. METHODOLOGY year (where 2000 = 100), simply multiply the CPI indices for 2008 base
3.1 Introduction year by the Conversion factor (1.6191) to get the equivalent indices as
In this methodology the Haylett Formula as adopted by SAICE for de- per the 2000 base year.
termining the CPA was used to calculate the fCPA, for the municipal
financial year from 2001/02 to 2011/12. However in order to use the
expression in Equation 1, the required indices data for the Labour


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Table 2: Using the Conversion Factor for Determining the CPI

The base year for the PPI at the time of this study was conducted was to urban area”; then between January 2007 to December 2008 the data
2000, which means that there were no issues with regards to convert- for the Labour Index could be found in Table 7.1, also titled “Consumer
ing the indices data from one base year to another, for the period being Price Index and percentage change according to area”; and then in Jan-
examined (i.e. the municipal financial year of 2001/02 to 2011/12). uary 2009 onwards the data for the Labour Index can be found under
Geographic Indices and CPI per Province in Table A, titled “Consumer
3.2.2 CPI - Labour Index Price Index: Indices and percentage changes”.
The Labour Index is taken as the CPI according to urban area that is pub- Furthermore in 2001 the CPI provincial data for the Limpopo Province
lished by Stats SA in their monthly Statistical release P0141.1 Consumer was presented under Northern Province. An average of the provincial
Price Index publication. The CPI index values are published for each indices was calculated to provide an indicative Labour Index for the
province in the “Consumer Price Index and Percentage Change Accord- whole of South Africa. The Labour Index data was collected from Stats
ing to Urban Area Table” in publication P0141.1 is taken as the Labour SA from January 2001 to September 2012, from Stats SA’s monthly Sta-
Index for each province (as required by the expression in Equation 1). It tistical release P0141.1.
should be noted that the format of Stats SA, Statistical release P0141.1 Considering that municipal infrastructure valuations tend to coincide
Consumer Price Index has changed over the years. This means that the with the municipal financial year, an average Labour Index for the mu-
Table in Stats SA, Statistical release P0141.1 Consumer Price Index for nicipal financial year was determined by averaging the Labour Index
determining the Labour Index values changed. Between January 2001 values for each month of the municipal financial year (i.e. July to June).
to December 2006 the data for the Labour Index could be found in Ta- This was calculated for the municipal financial year from 2001/02 to
ble 21, titled “Consumer Price Index and percentage change according 2011/12, the results are presented in Table 3.

Table 3: Labour Index Values per Province for each Financial Year


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In Table 3 the prov- Table 4: Plant Index, Material Index and Fuel Index Values for each Municipal Financial Year publish guidelines
inces are listed by their for the coefficients.
initials and the ZA The coefficients rec-
refers to the average ommended in the
value calculated for the February 2009 guide-
whole of South Africa. lines obtained from
the SAFCEC website,
3.2.3 PPI - Plant Index, as published by the
Material Index and CIDB under the “Com-
Fuel Index piler Guidance Note
The Plant, Material and - Component docu-
Fuel Indices used in ment: C1.2 - Contract
Equation 1 are specific Data” (CIDB 2009) are
PPI values that are pub- presented in Table 5.
lished by Stats SA in their monthly Statistical release P0142.1 Consum- A simple statistical analysis of the figures presented in Table 5 is pre-
er Price Index publication. sented in Table 6.
The Plant Index is taken as the “Civil Engineering Plant” index as pub- From Table 5 it can be seen that majority of the work categories (1,
lished in Table 12, titled “Producer Price Index for Selected Materials’, of 2, 3a, 3b, 4, 5 and 6) are readily associated with Roads and Stormwater
the Statistical News Release P0142.1. infrastructure, although work categories 1 and 6 could also be found in

Table 5: Guidelines for the Coefficients for the Contract Price Adjustment as published by the CIDB

The Material Index is taken as the “Civil Engineering” index as pub- other service sectors of municipal infrastructure (such as Water, Sanita-
lished under Building and Construction in Table 11, titled “Producer tion, Solid Waste and Operational Building etc.). Work categories 8 and
Price Index for Materials Used in Certain Industries”, of the Statistical 9 would be associated with Water and Sanitation and work category 7
News Release P0142.1. can be associated with buildings.
The Fuel Index is taken as the “Coast and Witwatersrand” index as Although the work categories provided by the CIDB coefficients table
published under Diesel Fuel in Table 12, titled “Producer Price Index for seem to be dominated by the construction of roads, which tends to
Selected Materi- account for only
als”, of the Sta- Table 6: Statistical Analysis of Coefficient Values in CIDB Guideline a part of the
tistical News Re- total municipal
lease P0142.1. infrastruc ture
The Plant In- value, it is pos-
dex, Material sible to identify
Index and Fuel work categories
Index data was that could be
collected from grouped into
Stats SA from January 2001 to September 2012 from Stats SA’s monthly broad classes of municipal infrastructure. In a typical municipality,
Statistical release P0142.1. the value of the Roads and Stormwater assets generally accounts for
Similarly to the Labour Index an average Plant Index, Material Index around 30% of the total value of the municipal assets and Water and
and Fuel Index for each municipal financial year was determined by Sanitation infrastructure assets together can typically account for up
averaging the Labour Index values for each month of the municipal to 30% of the total value of municipal infrastructure assets. This leaves
financial year (i.e. July to June). This was calculated for each municipal about 40% of the total value of municipal assets that would comprise
financial year, from 2001/02 to 2011/12, the results are presented in of Operational Buildings, Community Facilities, Public Amenities,
Table 4. Solid Waste and Electrical infrastructure assets. Using these guide-
lines based on the authors experience of municipal infrastructure and
3.3 The Coefficients in particularly the typical composition of municipal infrastructure in
The coefficients used in Equation 1 are generally pre-defined and stat- terms of value, a weighting factor was assigned to each work category
ed in the contract for the civil engineering works. The sum of the four in Table 5 order to provide a more representative measure of the value
coefficients are required to add up to unity. The CIDB and the SAFCEC of infrastructure associated with municipalities.


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Table 7: Weighting of Coefficients to Represent Typical Composition of Municipal Infrastructure

These weighting factors were then applied to each work category 3.4 Calculating the Contract Price Adjustment
and the resultant sum for coefficient components are then added to Utilising the values in Table 3 for the Labour indices, Table 4 for the
determine a suggested labour, plant, materials and fuel coefficient, Plant, Material and Fuel indices, Table 8 for the coefficients, and tak-
these results are presented in Table 7. ing the non-adjustment portion to be 0.1 as per the SAICE guidelines,
The coefficients for the suggested weighting’s in Table 7 were then the fCPA can be determined using the formula in Equation 1. It should
rounded up and down, based on the statistical trends presented in be noted that the base year for the calculations will be the municipal
Table 6, to provide the overall recommended coefficients that will be financial year of 2000/1 for which all the indices will be taken as 100.
used to calculate the CPA which should be more representative of mu- The results of these calculations are presented in Table 9.
nicipal infrastructure than the figures provided in the guideline (CIDB In Table 9 the fCPA was calculated using the expression in Equation 1;
2009), the results are presented in Table 8. the Effective Value is the nominal value for the asset based on the value

Table 8: Final Recommended Coefficients for Municipal Infrastructure

Table 9: Contract Price Adjustment Factor Calculated from the 2001/2 to the 2011/12 Municipal Financial Year

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of the asset in the base municipal financial year (2000/01), which for successively for every year in between the two years. Overall the Year
this study was taken as a nominal value of 1000; the CPA Value repre- to Year % Change best shows how the asset value changes over the
sents the difference between in the asset value from the previous year municipal financial years, thus the Year to Year % Change value will be
(municipal financial year) to the current year (municipal financial year), used as the CPA based ‘inflation’ rate for municipal infrastructure, des-
taking the value in the base municipal financial year (2000/01) to be ignated the percentage Contract Price Adjustment (%CPA).
1000; the Base Year % Change is the percentage difference between
the value in the municipal financial year from the base municipal fi- 4. COMPARISON OF %CPA TO CPI AND PPI
nancial year (2000/01); the Base Year Multiplication Factor represents 4.1 Introduction
the figure that needs to be multiplied to an asset value in the base In order to understand the significance of the value of the %CPA it is
municipal financial year (2000/01) in order to determine its value in the best considered in comparison to the headline inflation rates for the
municipal financial year in question; the Year to Year % Change is the CPI (for all items in all urban area in South Africa) and PPI (for domestic
percentage change in asset value from the previous municipal finan- output of all industry groups in South Africa). This section details how
cial year to the current municipal financial year; and the Year to Year the CPI and PPI values are determined for each municipal financial year
Multiplication Factor represents the figure that needs to be multiplied and then a comparison between the %CPA, CPI and PPI is presented.
to an asset value in the previous municipal financial year to determine
it value in the current municipal financial year. 4.2 CPI
It should be noted that the values provided for the Base Year % The headline CPI is the CPI determined for all items in all urban area in
Change and the Base Year Multiplication Factor always refer from the South Africa, and this is the figure that is widely reported in the me-
current municipal financial year to the base municipal financial year dia as the %CPI. The headline CPI is published monthly by Stats SA (in
(2000/01). This means that in order to determine the escalation in their Statistical release P0141.1 Consumer Price Index), but historical
value of an asset from the base municipal financial year (2000/01) to records are also available from the Stats SA Website (Stats SA 2012).
the 2009/10 municipal financial year, the value of the asset in the base The headline CPI figures (both the index and the % change) from
municipal financial year is multiplied by the Base Year Multiplication January 2000 to September 2012 were obtained from the Stats SA
Factor of the 2009/10 municipal financial year to provide the value Website. The headline CPI index values obtained were based on the
of the asset in the 2009/10 municipal financial year. Similarly to de- 2008 base year (where 2008 = 100) and these values were converted
escalate from the 2007/08 municipal financial year asset value to the to the 200 base year (where 2000 = 100) as per the conversion factor
base municipal financial year (2000/01), the value of the asset in the in Table 1.
2007/08 municipal financial year is divided by the Base Year Multiplica- Similarly to the Labour Index, Plant Index, Material Index and Fuel In-
tion Factor of the 2007/08 municipal financial year to determine the dex that was calculated for each municipal financial year, the Headline
value of the asset in the base municipal financial year (2000/01). This CPI (annualised %) was determined by averaging the %CPI values for
also means that in order to determine the escalation/de-escalation each month of the municipal financial year (i.e. July to June). Thus an
from one non base year to another non base year, the value of the as- annual municipal financial year %CPI was calculated for the municipal
set must first be determined for the base year by dividing the first years financial years from 2001/02 to 2011/12 along with a multiplication
asset value by that years Base Year Multiplication Factor, then the value factor and the results are presented in Table 10.
of the asset in the base year must be multiplied by the Base Year Mul-
tiplication Factor of the second year to determine the assets value in 4.3 PPI
the second year. The headline PPI is the PPI determined for domestic output of South
Alternatively the Year to Year % Change and the Year to Year Multipli- African industry groups, and this is the figure that is widely reported
cation Factor provides the step change between municipal financial in the media as the % PPI. The headline PPI is published monthly by
years. Thus in order to determine the escalation from the 2004/05 mu- Stats SA (in their Statistical release P0142.1 Producer Price Index), but
nicipal financial year to the 2005/06 municipal financial year, the value historical records are also available from the Stats SA Website (Stats
of the asset in the 2004/05 municipal financial year is multiplied by the SA 2012).
Year to Year Multiplication Factor of the 2005/06 municipal financial The headline PPI figures (both the index and the % change) from

Table 10: Annual Municipal Financial Year %CPI from 2001/02 to 2011/12

year to provide value of the asset in the 2005/06 municipal financial January 2000 to September 2012 were obtained from the Stats SA
year. Similarly to de-escalate from the 2010/11 municipal financial year Website. The headline PPI index values obtained were based on the
asset value to the 2009/10 municipal financial year asset value, the 2000 base year (where 2000 = 100). Similarly to the Labour Index, Plant
value of the asset in the 2010/11 municipal financial year is divided Index, Material Index and Fuel Index that was calculated for each mu-
by the Year to Year Multiplication Factor of the 2010/11 municipal fi- nicipal financial year, the Headline PPI was determined by averaging
nancial year to provide value of the asset in the 2009/10 municipal the %PPI values for each month of the municipal financial year (i.e. July
financial year. This also means that in order to determine the escala- to June). Thus an annual municipal financial year %PPI was calculated
tion/de-escalation from one year to several years before or after, the for the municipal financial years from 2001/02 to 2011/12 along with a
value of the asset will have to first be escalated/de-escalated each year multiplication factor and the results are presented in Table 11.


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Table 11: Annual Municipal Financial Year %PPI from 2001/02 to 2011/12

4.4 Comparison of Inflation Indices In general it can be seen in Table 12 that the %CPA follows a similar
In Section 3.4 the annual (based on the municipal financial year) %CPA trend to the headline CPI and PPI figures, although the %CPA is often
was calculated, in Section 4.2 the annual (based on the municipal finan- an extreme value (either above or below) both the CPI and PPI and this

Table12: Comparison between Calculated Annual %CPA, CPI and PPI, based on Municipal Financial Years

cial year) % headline CPI was determined and in Section 4.3 the annual is presented graphically in Figure 1. This suggests that there is a sound
(based on the municipal financial year) % headline PPI was determined basis for using the %CPA value rather than the CPI or PPI values usually
for the 2001/02 to 2011/12 municipal financial years. These figures are used to account for inflation in the value of infrastructure as the %CPA
presented in Table 12 and allow a comparison to be made of the %CPA tends to provide significant variances against the other two measures
against the two headline inflation indices the CPI and PPI. of inflation.

Figure 1: Calculated %CPA, Headline CPI and PPI form the 2001/02 to 2011/12 Municipal Financial Years


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5. CONCLUDING REMARKS REFERENCES

In this paper the formula for calculating the price escalation for civil CIDB2009,Compiler Guidance Note - Component document: C1.2 - Con-
engineering construction works developed by SAICE was utilised to cal- tract Data, Construction Industry Development Board, accessed Octo-
culate an annual percentage inflation based on the municipal financial ber 2012, < http://www.cidb.org.za/documents/pdm/toolbox/>
year, the %CPA, for municipal infrastructure that is based on the more
representative inflation in the civil engineering construction industry SAICE 2010, General Conditions of Contract for Construction Works,
from 2001/02 to 2011/12. South African Institution of Civil Engineering, Second Edition 2010
The %CPA has been compared against the headline CPI and PPI fig-
ures (also based on the municipal financial year) and these results are Stats SA 2012, StatsOnline, Statistics South Africa, accessed October
presented in Table 12 and shown as a graph in Figure 1. 2012, <http://www.statssa.gov.za/>
It is recommended that when determining the escalation or de-esca-
lation in the value of municipal infrastructure over the municipal finan-
cial years that the %CPA figure is used, rather than the CPI or the PPI, as
it is based on the inflation that would have been experienced in the civil
engineering construction industry from which municipal infrastructure
is created and therefore will provide a more representative estimate of
the inflation incurred by municipal infrastructure.
The tool presented in this paper will assist Municipalities by providing
them with a means to determine the value of infrastructure, at a particu-
lar date, in a consistent, easier and more cost effective manner, which in
turn should enable Municipalities to better understand the budgetary
requirements they will need to maintain and operate their infrastruc-
ture in order to provide the services needed by their communities.
Furthermore as Municipalities are obligated to provide accurate ac-
count of their infrastructure assets in their annual reports to the AG, the
tool presented in this paper provides a method for determining infra-
structure values, at any base date, in an easy, consistent and affordable
way (as it avoids the huge costs associated with maintaining and up-
dating a database of infrastructure costs). Thus reducing the burden on
Municipalities in meeting their legislative obligations, by reducing the
time and cost of determining appropriate time related infrastructure
values for their asset registers.