Paper Details

Theconstructіon industry іs a vіtal sector іn any economy and significantly contributes to socio-economic growthof a country. Cost escalations one of the consequentіalіdentіfіedrіsks faced by constructіonіndustry. Current approach toaccommodate price variation in India is unrealistic and non-compensating. With the advent of contracting practices in theconstruction industry and the risk faced by contractors, reviewing the existing methodology of price variation and suggestingchanges in the working process is of utmost importance. This paper attempts to lay down two alternatives for the traditionalcost escalation formula for the Indian construction industry. While the traditional formulae in India and many othercountries rely on the use of Wholesale Price Index (WPI) and Consumer Price Index (CPI) to calculate cost variation, thenew approaches lay stress on the establishment of new indices known as Construction Cost Indices, or using the market ratemethod for calculating escalation. This paper also tries to bring forth the various shortcomings in the existing methodologyand suggests ways to avoid such inadequacies in the new approaches. The paper also emphasizes the use of these formulae inthe international arena and provides a comparison of the methods to highlight the significance of new approaches.

Saeel K.Bhosale, A.P.Khatri, “New Approach Towards Study And Estimation Of Cost Escalation In Construction Industry”, International Journal of Advance Engineering and Research Development (IJAERD), Vol. 4, Issue 7, pp. 140-146, July 2017.