Computerized Approach for Forecasting the Rate of Cost Escalationby Awad S. Hanna, Unv of Wisconsin-Madison, Madison, United States,
Andrew N. Blair, Unv of Wisconsin-Madison, Madison, United States,
Abstract: This paper reviews the treatment of escalation in construction costs. The causes of escalation are outlined and the effect of escalation on the contractor and the owner is discussed. Various criteria are given for optimally allocating construction escalation risk and the use of escalation clauses is discussed. Methods for forecasting escalation are qualitatively discussed. A computerized approach for forecasting the rate of cost escalation is presented using historic data from Engineering News-Record cost indices.
Subject Headings: Construction costs | Forecasting | Construction methods | Computer software | Contractors and subcontractors | Owners
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