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A Study on the Policies to improve the Escalating Regulations of Construction Price - With a Focus on Results of a Delphi Survey -  

Choi Min-Soo (한국건설산업연구원)
Publication Information
Korean Journal of Construction Engineering and Management / v.5, no.6, 2004 , pp. 203-211 More about this Journal
Abstract
This study is the results to survey on the problems and improvable Policies for current escalation system in construction contracts, through a Delphi survey to experts. From the survey results, it is desirable to decide the fluctuation rate of construction cost, which is the requirement of escalation clause, on the basis of inflation rate or construction cost index. The desirable price fluctuation rate is proposed as a $3\%$ level. However, it is difficult for construction companies to cope with the sudden increase of material price in advance, arising from short-term shock factors such as exchange rate and international raw material's price. Accordingly escalation system for specified materials, as an exceptional mode, should be introduced. As a method to calculate the fluctuation rate, ARCA(adjustment rate for the categories of articles) is more desirable than ARI(adjustment rate for an index), because the ARCA can be more reflected the characteristics of each construction work.To rationalize the ARI method, it is needed to announce the wage index, material index and machinery expense index via detailed classification by construction types. Also, it is desirable to prescribe the bidding date as a starting date of the price change, rather than contact signing date. considering the price change can happen since the biddiilg stage.
Keywords
Escalation; Price Change; Construction Cost Index; Fluctuation Rate; Specified Materials; Delphi;
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