Are construction cost escalations a natural law?!

Stephan Klamert

ERES from European Real Estate Society (ERES)

Abstract: Since primitive times of construction, building costs and their compliance are essential for building owners and investors. But the daily press is reporting regularly about construction projects, which suffer from building cost escalations. Often it is actually spoken about building cost explosions. Realising that, you can have the feeling that an accurate building cost estimation is a very tough challenge for the people, involved in the construction business. Are cost escalations a natural law, which has to be accepted? In contradiction to that, there is the keen wish of the private, as well as the public building owners to have building cost accuracy. Building costs, which are predicted in an early project stage of a construction project are fundamental for the investment decision to realise a construction project or not. Furthermore, these predicted costs are within the cost control the basis for more project accompanying cost relevant decisions. It is essential for the building owner to keep the costs within the budget. This can judge about success or failure of the investment.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2011-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2011_54

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