The construction industry in Nepal is struggling with a significant challenge - fluctuations in the prices of construction inputs and the effective management of these fluctuations during project planning and execution. In the context of building projects, many project professionals encounter substantial difficulties throughout the bid process, primarily stemming from a lack of knowledge in managing contract price adjustments. This research aimed to scrutinize the problems, causes, and effects associated with the price adjustment clauses and practices in building projects and highlight the probable solutions for proper management. Addressing this research problem involved conducting studies on price adjustment clauses and practices applied within different building projects under DUDBC. The study has identified shortcomings in current construction contract price adjustment practices, emphasizing a disconnect between adjustments and work schedules and inadequate consideration of local economic conditions, intensified by factors like political instability and insufficient market research contribute to uncertainties, disputes, and financial risks in construction projects. The study identified key issues, including the challenges in providing fair Cost Price Adjustment (CPA) when contractors exceed contract durations. To address these issues, establishing clear criteria for triggering price adjustments, promoting unbiased evaluations, leveraging technology for market monitoring, and linking price adjustments to work progress and schedule were determined as crucial solutions. Furthermore, the study emphasized the importance of realistic cost forecasting mechanisms for effective project management, aiming to mitigate uncertainties, conflicts, and financial risks associated with the projects. The study suggests that establishing clear criteria, promoting fairness, utilizing technology for real-time monitoring, linking adjustments to project dynamics, transparent cost estimation, comprehensive guidelines issuance, system enhancement, and emphasizing thorough planning are crucial for a just and reliable financial framework in the projects.

Keywords

Building projects, Price Adjustment Clauses, Contract Price Adjustment, price escalation, price adjustment

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