Computerized Approach for Forecasting the Rate of Cost Escalation

by Awad S. Hanna, Unv of Wisconsin-Madison, Madison, United States,
Andrew N. Blair, Unv of Wisconsin-Madison, Madison, United States,

Document Type: Proceeding Paper

Part of: Computing in Civil and Building Engineering


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: Computing in civil engineering | Construction costs | Construction methods | Computer software | Control systems | Contractors and subcontractors | Owners | Risk management

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