I am looking for formula to calculate escalation on construction
 

When one tenders on a contract, there is a clause about escalation of the
contract price. If I remember correctly, one formula is for labour and one
for material. Can somone please help??? Ronnie.

Answer: I am looking for formula to calculate escalation on construction
 

1. To calculate labor escalation, use the formula:
   Formula:

   ---

   New labor rate = Base labor rate x (1 + (Escalation rate/100))^Number of years 


   ---

2. To calculate material escalation, use the formula:
   Formula:

   ---

   New material cost = Base material cost x (1 + (Escalation rate/100))^Number of years 


   ---

I am looking for formula to calculate escalation on construction
 

Ronnie wrote:
When one tenders on a contract, there is a clause about escalation of the
contract price. If I remember correctly, one formula is for labour and one
for material. Can somone please help??? Ronnie.


Hi Ronnie,

You have not provided any detail about the business rules for
escalation, but I can take a stab at the general idea.

Hopefully you are keeping track of day-to-day expenses (or perhaps, even
more detailed transactions). At the least, you probably have cumulative
results for these items for you project.

The idea (I think) is to sum up the labour and material costs and
compare them to some nominal, expected values you have stored somewhere.
There is also probably a target completion date somewhere, so you know
whether a project is close to completion or not--this might can serve as
a trigger for escalation.

In logical terms,

IF [days to project target completion] < 30 AND [labour cost expected
labour cost * .90] then [flag for escalation].

This is a pretty simplistic example, but without more knowledge of your
business rules for escalation, it's impossible to give specific advice.