Impact of inflation rate on construction projects budget: A review
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Abstract
Owing to its significant contribution to GDP and other sectors, the construction industry plays an important role in economic growth. The economy of countries depends on a number of variables in which inflation is one of them. The position of inflation in economic growth cannot be overlooked, as it is retaliating \neither positively or negatively. This paper explores the role of inflation and how it affects the economy \nand the construction industry. It is concluded that the inflation rate is neglected in most of the construction projects economics and budgeting that causes the project cost overrun as the building materials \nprices, labour wages, and machinery hire rates are changing annually. Moreover, a framework has been \nproposed that highlights the strong relationship between the inflation rate and the construction industry. \nThe framework is useful for the future budget estimation model to eliminate project cost overrun which \noccurs due to the inflation rate.