Assessing the Current Management Practice of Price Escalation and Its Effects on Cost Performance for Federal Public Building Projects
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Date
2025-06-01
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Addis Ababa University
Abstract
In a country like Ethiopia, the construction sector is one of the major contributors tonational growth. Despite its importance in one country growth its performance, theindustry has faced many challenges during the last few years. One of the major reasons identified by different researchers is price escalation in the inputs of the construction projects. This study assesses the management practice of price escalation and its effect on the cost performance of federal public building projects. The research is descriptive and explanatory in nature and employed a mixed-method approach (both qualitative and
Quantitative) with case study methodology. Four suitable cases from Universities located in Addis Ababa city were selected, and document review was used as a data collection instrument and utilized both primary and secondary data. For analyzing the collected data, the researcher used content and thematic analysis with within case analysis and cross-case analysis. In addition to these, the researcher uses four themes for analyzing the data: a description of the case, identifying the increment of major materials, labor, and equipment, assessing the effect of price escalation on each project's cost performance, and identifying the price adjustment techniques, source of price, and weightage for each project. The study investigates the impact of material price escalation on the cost performance of selected construction projects. Price increment were analyzed across various activities in both substructure and superstructure elements. In Project A, the maximum increment in the substructure was 49% for the 500 mm thick mat slab, while the superstructure’s 180 mm thick floor and roof beams experienced an escalation of 89%. For Project B, the substructure’s 200 mm thick suspended ground floor slab showed the highest increase at 85%, with a similar escalation of 88% seen in the superstructure’s 270 mm thick flat roof slab. Project C recorded an 84% increment in the foundation pad for the substructure, while the 180 mm thick roof slab led in the superstructure with an 87% increase. And also in Project D, the footing in the substructure had the greatest escalation at 91%, alongside the superstructure’s elevation column, which increased by 88%. And also, the results showed that there were different management practices used by contractors to overcome the challenges of price escalation. To enhance effectiveness, the study recommends early implementation of contractual adjustments and proactive cost management strategies in building projects. In the future, studies should focus on regularly developing construction resource price indices, analyzing the influence of finishing material cost fluctuations on project outcomes, and evaluating the contractor’s cost structure to better address non-adjustable
contract elements.
Key word: construction; Cost Performance; Price escalation