Which factor is often a cause of cost escalation in construction projects?

Cost escalation in construction projects is frequently driven by inflation and fluctuations in material prices. As the economy changes, the prices of raw materials necessary for construction—such as steel, lumber, and concrete—can rise significantly. These increases can occur due to various economic factors, including supply chain disruptions, increased demand for materials, or changes in tariffs and trade policies. When prices of these essential materials go up after the initial cost estimates have been made, the overall project budget can become strained, leading to cost overruns.

In contrast, factors like increased worker morale, reduction in project scope, and lower construction quality typically do not contribute to cost escalation in the same way. While worker morale can impact productivity positively, it does not inherently increase costs. A reduction in project scope generally leads to cost savings rather than escalation, and lowering construction quality can also translate to cost reductions, albeit at the risk of long-term reliability and safety. Therefore, inflation and material price increases are primary contributors to the financial challenges faced during construction projects.