fin - 01 - Cost escalation

source: https://www.linkedin.com/advice/0/what-key-factors-indicators-influence-cost-escalation?trk=cah1

What are the key factors and indicators that influence cost escalation and inflation?

• Market conditions
• What affects
• of the industry, sector, or region where the project is located
• the supply and demand of resources, materials, labor, and equipment
• the level of competition, regulation, and innovation
• Other - contribution of Sandeep Shri 
• geopolitical instability, 
• resource scarcity, 
• fluctuations in exchange rates
• source : https://www.linkedin.com/in/sandeep-shri-892350247/?trk=article-ssr-frontend-x-article&originalSubdomain=in
• How affects
• the availability, quality, and price of inputs and outputs,
•  transportation and logistics costs, disrupt supply chains, and lead to shortages of critical materials (Sandeep Shri notes)
• the change in risks and opportunities for the project.
• Remedy
• track market conditions : use indicators such as market indexes, price indexes, productivity indexes, and benchmarking data
• Project scope and complexity
• What does change:
• size, duration, and requirements of the project
• the degree of uncertainty, variability, and interdependence involved in the project
• What do they affect
• They affect the amount and type of resources, materials, labor, and equipment needed, 
• they affect the level of coordination, communication, and control required
• Remedy, Use indicators such as 
• scope statements, 
• work breakdown structures, 
• schedules, 
• and risk registers
• Project performance and changes
• What does change
• the actual progress, quality, and outcomes of the project
• the deviations, adjustments, and variations that occur along the way
• How do they affect
• efficiency, effectiveness, and value of the project, 
• the level of waste, rework, and contingency 
• Remedy, use indicators such as:
•  earned value analysis, 
• variance analysis, 
• change requests, 
• and lessons learned
• External factors and events
• the economic, social, political, environmental, and technological factors and events that affect the project context and environment
• How do they affect:
• The stability, security, and sustainability of the project, 
• the level of opportunity, threat, and uncertainty 
• Remedy, track: use indicators such as :
• economic forecasts, 
• industry trends, 
• stakeholder analysis, 
• scenario planning
• Cost planning methods and tools
• What are the factors
• the approaches, techniques, and systems used to estimate, budget, monitor, and control the project costs
• What is affected
•  the reliability, accuracy, and completeness of the cost data and information, 
• the level of transparency, accountability, and feedback 
• Remedy, use indicators such as:
• cost models, cost databases, cost reports, and cost audits
• Cost control strategies and actions
• What affects it
• plans, decisions, and measures taken to manage and mitigate the cost escalation and inflation risks and impacts
• What is affected
• the alignment, optimization, and improvement of the project costs, 
• the level of collaboration, innovation, and learning
• Remedy, Track and use indicators such as:
• cost baselines,
• cost targets, cost savings, and cost benefits
• Analysis tools:- from linkedin.com
• Pareto analysis 
• It is based on the 80/20 rule, which states that 80% of the effects come from 20% of the causes. For example, 80% of the project costs may be caused by 20% of the activities, or 80% of the customer complaints may be due to 20% of the defects
• How to use it
• focus your efforts and resources on the most critical and impactful problems or opportunities
• reduce waste and inefficiency by eliminating or minimizing the root causes of high costs
• increase value and quality by enhancing or maximizing the factors that contribute to customer satisfaction and profitability
• Technics 
• define the problem or opportunity
• measure the effect or outcome
• Collect data on the possible causes or factors that influence the effect or outcome
• use tools such as brainstorming or surveys
• Group the causes or factors into similar types, 
• Calculate the frequency or magnitude of each cause or factor, 
• Create a Pareto chart

other ressources:

https://www.linkedin.com/pulse/topics/browse/c/