Investigation of Price Adjustment Problems in Ethiopian Construction Projects (The Case of Arsi Zone Public Building Projects)

Abstract

Public building construction projects have become a growing concern. Because the projects ensure the construction of hospitals, colleges, offices, universities, and other public buildings to overcome social issues. However, the Ethiopian building project price adjustment provision was not properly implemented. The expected programs and uses of public building construction projects are adversely affected. Thus, this thesis is aimed to establish a mitigation measures system to a prune problem at the grass route level to solve inappropriate price adjustment implementation. Focused group discussion, case study, and questioner survey are employed as data-gathering instruments in this study. The study was analyzed with the use of statistical package Social Science software and the Relative Importance Index and Cronbach’s alpha is used to test the reliability of data and proved reliable. In addition, the validity of the study was checked by the Triangulation method and the results obtained supported each other. Therefore; the outcomes confirmed scope change, supervision problems, inflation, and fluctuating in the exchange rate are the most frequent and severe factors that caused cost escalation in public building construction. While the change in project cost, client resistance to honoring price adjustment, and increase in material, labor, and equipment costs are the major factors impeding price adjustment practice in project execution. Furthermore, wherever price adjustment problems in public building projects are not resolved, project delays, project termination, and project financial problems are encountered as consequences. Hence; good decision making at the right time, a special contract condition must be drafted by experienced professionals, value engineering of alternate materials, paying the contractor in full advance payment, and regular cost monitoring are identified as mitigation steps for this problem. This research addresses the way to mitigate the issue of price adjustment clause misapplication in Ethiopia. More studies in more zones and regions are required to exert positive stresses so that the study's findings can be used to strengthen the national conditions of contract.