A Study on the Price Escalation System in a Construction Contract

The purpose of this study is to suggest policies to improve the price escalation system in a construction contract through, a Po licy Delphi technique. The Delphi, including two times questionnaires and a group discussion, was conducted by joining 14 experts. We also examined the escalation provisio...

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Bibliographic Details
Published in:KSCE journal of civil engineering 2006-07, Vol.10 (4), p.227-232
Main Authors: Choi, Minsoo, Kim, Jinu, Kim, Moohan
Format: Article
Language:English
Subjects:
Construction
Construction contracts
Contractors
Delphi method
Studies
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Summary:The purpose of this study is to suggest policies to improve the price escalation system in a construction contract through, a Po licy Delphi technique. The Delphi, including two times questionnaires and a group discussion, was conducted by joining 14 experts. We also examined the escalation provisions of various countries. Results of the Delphi showed that the minimum fluctuation rate fo r price escalation was desirable at a level of 3%. To compute, the fluctuatio rate, calculating the price fluctuation of overalhrticles, was more desirable than using price indices. A bidding date was more reasonable as the initial date of change in price. Losses caus ed by price change should be shared between contractor and owner; therefore a deduction rate should be introduced in contract price escalation. Meanwhile, overhead and profit should be adjusted in proportion to the fluctuation rate; but advance payment or the delayed construction amount should be deducted from the adjusted amount.
ISSN:1226-7988
1976-3808
DOI:10.1007/BF02830776