How the System Uses Pricing Indexes

Once you have set up pricing indexes for each applicable state in the HQ Escalation Index form, you will need to activate pricing escalation for each applicable job or customer job.

This is done by checking the Apply Price Escalators box in JC Jobs (jobs), PM Projects (projects), or MS Quotes (jobs, customer jobs). In addition, you will need to make sure the finished material and the component material are set up on a bill of materials (in IN Bill of Materials or IN Bill of Materials Override).

When the finished material is sold to a job or customer job (via MS Ticket Entry), the MS Oil Price Escalation report determines pricing fluctuations based on the following:

  • Bid Index – This is the monthly index entry (in HQ Escalation Index, Monthly Index tab) used as the 'starting point' for price escalation. You must have a Bid Index defined for each applicable job or customer job, based on the job or customer job's 'bid index date'. The bid index date will be either the Bid Index Date specified in MS Quotes (jobs or customer jobs) or the contract start month from JC Contracts/PM Projects (jobs, when no quote exists). For example, if you set up a quote for a job with a Bid Index Date of 01/15/09, you must also set up a monthly index entry that includes 01/15/09 in the From/End Date range (e.g. 01/01/09 - 01/31/09).

  • Bid Index Amount – This is the price (English and Metric) specified for the Bid Index month.

  • Sale Date – This is the sale date specified in MS Ticket Entry. The system uses this date as the ‘place date’ (the date material was placed on the job), which is then used to determine the place index to use.

  • Place Index – The additional monthly indexes—defined by each state—added each month (e.g., if the job start month is 1/1/09, all monthly indexes set up after 1/09 will become that job’s placing indexes.). These are accumulative starting with the bid index.

  • Place Index Amount – This is the price (English and Metric) specified for the Place Index month.

When you run the MS Oil Price Escalation report, it compares the current month’s index amount (place index amount) with the bid index amount and calculates the difference (increase or decrease). If the amount increases/decreases by the factor (specified for the bid index), the adjustment is shown on the report. For example, say the factor is 5%, the bid index amount is $632.00, and the current month’s index is $648.00, a difference of -16.00. Since the difference is less than 5% of the bid index amount (632.00 x .05 = 31.60), the adjustment would not be applied. If however, the current month’s index were $668.00, the adjustment (36.00) would be more than 5% of the bid index amount and would therefore be shown on the report.