Home » BCIS basics: an introduction to BCIS Price Adjustment Formulae Indices (PAFI)

BCIS basics: an introduction to BCIS Price Adjustment Formulae Indices (PAFI)

Published: 09/03/2026

Understanding the impact of input cost inflation is an important part of construction cost planning and contract management.

Labour, plant and materials costs tend to change over time and can shift in response to wider economic and geopolitical conditions.

BCIS Price Adjustment Formulae Indices (PAFI) provide a structured way to track these underlying inflationary pressures, enabling cost professionals, contractors, clients and other key stakeholders to stay on top of costs.

What are BCIS PAFI?

BCIS PAFI are intended to represent underlying inflationary pressures, rather than the actual costs on a specific project.

They do not reflect individual project prices or local market pressures such as subcontractor pricing or merchant discounts. BCIS PAFI represent the movement in factory gate prices set by manufacturers and nationally agreed wage awards.

The indices were first introduced in 1973 by the National Economic Development Organisation to support the formulae method of calculating fluctuations in construction contracts. This provided a more credible, efficient approach to calculating and reimbursing cost movements during a project.

Responsibility for producing the indices has changed over time. They were originally calculated by the Property Services Agency and later by the Department for Business, Innovation and Skills. BCIS has produced the indices since 2009.

The way the indices are applied has also evolved.

Between the 1970s and 1990s, when lump sum contracts based on bills of quantities were widely used, the new formulae method linked individual items in a bill of quantities to specific indices. This meant the inflation adjustment applied to each interim payment reflected the mix of work carried out in that period.

There was an option to use a single index based on the mix of work in the contract, which was used exclusively for public housing initially. Since the turn of the century, this approach has been more widely adopted.

Today, a mix of indices are used to calculate a single index, based on predetermined resource weightings, which is applied in each valuation throughout a project to adjust contractor payments accordingly. In practice, this approach replaces the earlier use of multiple indices applied at different stages of a project.

BCIS PAFI are widely employed in construction contracts. They are used as standard in contract conditions set by numerous organisations including the Institution of Civil Engineers (New Engineering Contract), the Joint Contracts Tribunal and Association for Consultancy and Engineering (Infrastructure Conditions of Contract) to name a few.

How are BCIS PAFI compiled?

BCIS PAFI are published across multiple categories including Building, Specialist Engineering, Civil Engineering and related Specialist Engineering and Highways Maintenance.

Indices either represent work categories, such as demolition or general piling, or individual resources, such as plumbing labour.

Indices representing work categories are weighted according to the proportions of labour, materials and plant resources required to undertake those works. Resource indices enable subscribers to apply their own weightings where needed.

BCIS PAFI are compiled using internal and external data sources. These include the Office for National Statistics’ producer price indices (PPIs) and services PPIs, as well other sources provided to BCIS exclusively, including manufacturers’ data.

BCIS PAFI and BCIS Forecast of PAFI

In 2023, BCIS introduced BCIS Forecast for PAFI – a compilation of five-year forecasts for BCIS PAFI, allowing subscribers to assess how underlying inflation might impact construction costs in future. This dataset is separate from BCIS PAFI which measure historic and current cost movements rather than future projections.

The newer forecasting capability is designed to support cash flow management and budgeting. Together, BCIS PAFI and the BCIS Forecast of PAFI help subscribers assess retrospective, current and potential future movements in construction input costs.

Both datasets are updated monthly and feature indices that represent different work categories and individual resources.

Who can use BCIS PAFI?

BCIS PAFI and BCIS Forecast of PAFI are available to BCIS CapX subscribers.

Both datasets sit within the ‘Indices’ section of the service. Users can browse and select indices using drop-down menus and set time parameters as required. The base date for an index can be set to a common date or customised.

Users can also view multiple indices side by side and track their movement over time through charts.

All indices can be downloaded in a range of formats depending on user requirements.

For a deeper exploration of BCIS PAFI or BCIS CapX, request a demonstration from our team today.