Construction Kaiser Limited hosted its monthly Instagram live session on the topic “Managing 

Construction Costs During Inflation,” with Oluwatobi Osoba, CKL Cost Engineer, as the speaker and Oluwadamilola Balogun as the moderator. The discussion brought to light several insights and strategies critical for navigating inflation in the construction industry, based on questions posed during the session. Below are some key takeaways from the event. 

How does inflation specifically impact construction costs and the overall project delivery timeline? 

Inflation has posed a growing challenge worldwide, significantly impacting construction project costs and timelines. Within construction, inflation leads to: 

Cost Overruns: Unforeseen increases in material and labour costs can drive budgets beyond initial estimates.

Time Overruns: With rising costs, delays occur, often due to time spent adjusting project budgets or waiting for more affordable material pricing. 

Disputes Between Contracting Parties: These can arise as inflation causes unexpected shifts in project cost dynamics, potentially leading to disagreements over who bears the additional expenses. 

In recent months, we’ve seen fluctuations in the cost of materials such as steel and cement. How has Construction Kaiser adapted to these rising costs? 

Construction Kaiser Limited has implemented proactive strategies to address rising material costs, such as fluctuations in steel and cement prices. Key approaches include advance procurement, where materials are purchased ahead of time to lock in prices before inflation drives them higher. CKL also establishes trade agreements with suppliers that set price ceilings over specific periods, helping to stabilize budgets. Detailed re-measurement and material scheduling allow CKL to determine exact quantities, minimizing waste and optimizing resource use. Additionally, clear site instructions are issued to reduce errors, while additional work items are managed as variations with architect-supported documentation, enabling legitimate claims for any extra costs.

How can construction firms effectively communicate inflation-related cost increases to clients, while still maintaining trust and transparency? 

Transparent communication regarding inflation-induced price adjustments is essential to maintain client trust. Strategies include: 

Claims and Contractual Approach: How inflation impacts are conveyed often depends on the contract type 

Fluctuating Contracts: These contracts allow for price adjustments, so inflation-related changes can be processed as claims. 

Fixed Contracts: These are less flexible, requiring early, clear communication with clients about cost changes. Evidence, such as supplier notices or market reports, can help support these claims.

Our approach highlights the importance of pre-emptive planning, clear client communication, and strategic supplier partnerships as essential practices in maintaining project viability and client trust amidst inflation.