The Effect of Birr Devaluation on Public Building Construction, Case Study on Sub-City Office Building Projects in Addis Ababa
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Date
2018-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
AAU
Abstract
On October 2017 the Central Bank of Ethiopia devaluated Birr by 15% against US dollar.
Since the devaluation occurred, the price of construction materials in the country has been
sharply increasing. As a result, the construction sector is facing a range of obstacles. But he
extent to which the impact of devaluation has on the construction industry is not a wellstudied
area.
Initiated
by
this
fact,
this
research
investigates
the
effect
of
devaluation
on
public
construction
projects
that
were
commenced
before
the
devaluation
occurred.
It
also
focuses
on how the risk was managed after devaluation took place. The research investigates the
extent to which devaluation affects ongoing public construction projects regarding increasing
cost, time overrun and project scope. This study contributes to the discourse by revealing the
level of impact that economic decisions have in the construction industry in Ethiopia. The
research uses case study approach to understand the effect of devaluation on public construction
projects,
more
specifically on Sub-city office building construction projects. In order to
measure the effect of devaluation on the projects, contract documents, monthly progress reports
and material Performa of different periods concerning market prices used by the construction
company
are
critically
investigated.
In
conclusion,
having
investigated
that
high
inflation
rate,
volatile
market
price,
shortage
of
some
materials
and
shortage
of
currency
are
the
major
effects
of
devaluation
made
on
public
building
construction
projects.
This
unfortunate
economic
event,
have
resulted
high
price
escalation
and
delays
on
the
projects.
Description
Keywords
Devaluation effect, Uncertain financial Risk, Public construction project, Sub-city office building