Acceptable inflation for one year 1

[10815L]

Hi
What is the maximum acceptable inflation for one year, one of vendor is demanding from us 13%. this vendor is located in us and project is in Africa.
vendor also not signed the contract and he is refusing to open LC also.let me know how to deal this type of problems.
Thanks
10815L

 

[zeusfaber]

Depends on the local economy and on what is going on in the industry in question.

Depending on where you are, you may have access to Producer Price Indices - historical records which show you what prices have been doing for the past few years across the different industries in the local economy.

For the UK, for instance, these are collated by the ONS and are publicly available at: Link.

History is, of course, no guarantee of future performance - and you do have to consider whether past movements have been driven by cost or by greed - as well as the extent to which you can influence the market yourself.

A.

 

[DRWeig]

It depends on your local economy. 13% is not unreasonable if that is the approximate inflation rate of construction materials in your area. Check government statistics.

Good on ya,

Goober Dave

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[DRWeig]

Good answer zeusfaber. I am now reminded to refresh my browser before posting. Sorry to have duplicated your response...

Good on ya,

Goober Dave

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[IRstuff]

"Acceptable" to whom? If you both agree to it, then it's acceptable. If one or neither agrees, then it's not.

Obviously, one source is the local economy and its inflation rate. However, there's also the possibility that he low-balled initially and is now looking to get well. Or, he's looking to add a swimming pool.

the only really relevant question is, "What are YOU willing to pay?"

TTFN
faq731-376

 

[10815L]

Hi IRstuff,
The ball played well by bidder, even purchase order contract is not yet signed by him, even though fixed term and conditions.
Bidder is claver to get this contract but want to play more because he give the lowest project value.
Please explain further how to deal with type of bidders and how to solve this problems and bring him back on original offer.
Thanks

 

[IRstuff]

Sounds like he's the ONLY bidder? In which case, there's little you can do, since that would be a seller's market.

Typically, you would try to play one bidder against another to drive the price back down. Or you can motivate him by promising additional work in the future, provided he drops the price now. That's assuming your future activities can garner additional bidders. Otherwise, it's still a seller's market, but he might not necessarily know about that. If he bid low, but changed his bid, demand and explanation. If it's wonky, then you should dump him for being less than ethical.

TTFN
faq731-376