Reduction factor and Cost Index on DSR-2023 Estimates - Reg

[Rambabu Jalli]

Dear members,

Many Railways and MES engineers are there in this group. There may be a small confusion in applying reduction factor and Cost Index on DSR-2023 rates. I will explain this by taking an example. Let us consider that the place of work is Chennai. The rates in the DSR-2023 is applicable for Delhi in the year Apr-2023. 

Reduction factor : DSR rates are calculated using the basic rates of material, labour and hire charges of machinery. These calculations are compiled in a book called Delhi Analysis of Rates. Rates in DSR 2023 are adopted from the calculated or analysed rates. While analysing the rates the GST (18%) is considered as a multiplying factor of 0.2127 (i.e. 21.27%) instead of directly adding 18% GST so that C.P. and OH is also applicable on GST. 

But, on 08.08.2024 an order (copy attached) has been issued by CPWD saying not to adopt the Multiplying factor of 0.2127 for GST and GST of 18% shall be added at the end. Calculations are made in both the methods (0.2127 and 18%) and it was clearly mentioned that the DSR-2023 rates shall be modified (reduced) by a correction factor of 0.973 on the existing rates. Instead of reducing each rate, we apply this correction factor at the end or in the abstract of cost on the value of DSR-2023 items total.

Cost Index : The Cost Index is just like DA on our basic pay. The base of the Cost Index is not on DSR but on Delhi Plinth Area Rates which is mostly 100. Cost Index of DSR-2023 (Civil) is 107 over Delhi Plinth Area Rates 2021, whose base Index is 100. That means there's an increase in rates by 7% at Delhi as on 01-04-2023. 

So you need to get the Cost of Index of a particular place based on DPAR-2021. If the cost index provided to you is based on DPAR 2023 (base 100 in 2023), then you need to multiply the given cost Index with 1.07. 

Applying Cost Index : Just like the DA, the cost index shall also be applied to get present estimate value at a particular place. I hereby attach a copy of CI approval order for Chennai. In this order there are three cost indices i.e over DPAR-2019, over DPAR-2021 and over DPAR-2025. Since, DSR-2023 CI i.e. 107 over DPAR-2021 we have to use the CI as 121. So the DSR items total after the reduction factor shall be enhanced by the formula  (121 - 107)/107.

A sample estimate  with above mentioned calculations  and order dated 8.8.2024 are attached herewith .

with regards,

Rambabu Jalli

HYDERABAD - 500 063.

Mobile No. +91 9490 144 900

Website :  www.jallisapp.com