Applicability of ICTAD Price Fluctuation Formula for Government Funded Intelligent Building Projects

Abstract

In high inflationary situations, government fiscal policies etc., have an effect on price fluctuations in Intelligent Building (IB) projects which are funded by the Government. It can increase the cost of material, plant and labour, while increasing the risks that both the contractors and the clients have to face. The use of the ICTAD price fluctuation formula in construction projects of more than three months duration, especially those of the Government, will help to recover these unforeseen costs at least to a certain extent. The formula however has its own inherent constraints. The objective of this research is to identify these constraints and suggest solutions to overcome them. An expert survey and a case study were done towards achieving the main objective. The case studies comprised a document review and semi structured interviews. Code-based content analysis was used to identify the significant conclusions that could be made from the semi-structured interviews. The QSR. NVivo computer software was used to simplify the content analysis. The results emphasised that in the case of IB projects of the Government, there is a difference between the actual price fluctuations and the corresponding figures obtained using Institute of Training and Development (ICTAD) price fluctuation formula as the formula had its own limitations. Therefore there is a need to modify the way the ‘cost adjustment’ factor is determined in IB projects of the Government. By using reliable price indices while taking steps to improve the currently available norms, it will be possible to make available to future IB projects a better operating framework.