Study of cost escalation in indian building construction industry

Abstract

The Construction Industry has a major role in the development of Indian economy This industry consumes about 40 to 50 of the ninth five year plan outlay and contributes to nearly 20 of GDP However the performance record in successfully implementing infrastructure projects in India has not been very encouraging Cost overrun and cost escalation are part and parcel of the construction projects in India It was found that central and state government s mega projects, annually on an average face cost escalation of about Rs 400000 to 500000 million The level of investment requirement in the Indian building construction industry the poor response in successful implementation of government infrastructure projects and the lack of adequate research in the area of cost escalation management have been the motivation for the current research The study focuses on the identification and evaluation of factors affecting cost overrun and cost escalation in Indian building construction projects The research aims to study the trends in price of major building materials and cost indices in India The study also addresses the issue of cost escalation and the way it is currently being handled in the building construction contracts in India