Memorandum

City of Lawrence

Public Works

TO:	Dave Corliss
FROM:	Chuck Soules
Date:	August 16, 2006
RE:	Price Adjustment for Asphalt Materials August 22, 2006 Agenda Item

Please include the following item on the City Commission Agenda for consideration at the August 22, 2006 meeting:

APPLIES TO: Construction projects which include asphalt paving and/or patching.

EFFECTIVE DATE: Applies to Projects bid after August 22, 2006.

BACKGROUND/PURPOSE: Due to the volatility of crude oil prices, asphalt oil suppliers will only guarantee asphalt oil prices for purchases made during the current month. As a result, construction contracts/contractors cannot provide competitive pricing for projects in which asphalt paving or patching may occur in a subsequent month to when a bid for a project was obtained.

DETERMINATION: Prices quoted for asphalt will be based on the asphalt oil price in effect on the date of the bid. The contractor shall submit with their bid a copy of the asphalt oil supplier’s most current pricing information. Hot mix asphalt provided/placed in a subsequent month will be adjusted for each $10.00 increase/decrease in the price of asphalt oil; each ton of hot mix asphalt will be adjusted (increased/decreased) by $0.50 per ton.

The table below provides examples of possible adjustments, but does not limit any increases/decreases to only those shown in the table. 

Change in Price of Asphalt Oil/Ton	Change/Adjustment in Bid Price of Asphalt/Ton
$00.00 to $ 9.99	$0.00
$10.00 to $19.99	$0.50
$20.00 to $29.99	$1.00
$30.00 to $39.99	$1.50
$40.00 to $49.99	$2.00

The Director of Public Works will make adjustments to payments (increase or decrease) for the applicable work completed. If the working days or calendar completion date for the work - or a specific portion of the work - expires, payments (or deductions) will continue to be applied, but the maximum adjustment for the rest of the project will be the adjustment for the month the working days or calendar completion date expired.