EFFECT OF INFLATION ON COST OF LABOR IN CONSTRUCTION PROJECT

Inflation remains one of the most critical economic factors influencing construction project delivery in Nigeria, particularly through its impact on labour cost. This study investigates how inflation affects the cost of labour in construction projects within Offa, Kwara State. The research specifically identifies the major inflation-driven factors that influence labour cost, examines the extent of these effects on project performance, and evaluates the strategies currently used to manage labour cost fluctuations. A total of 80 structured questionnaires were administered to construction professionals in Offa, including Quantity Surveyors, Engineers, Builders, Contractors, and Maintenance Supervisors. All questionnaires were retrieved, resulting in a 100% response rate and providing adequate data for analysis. The collected data were analysed using the Mean Item Score (MIS) and Severity Index (SI) to determine the most significant inflation-related variables. The findings indicate that rising fuel prices, increased transportation costs, unstable government policies, depreciation of the naira, and the rising cost of basic living necessities are the most influential factors driving inflation in labour costs. The study also reveals that inflation results in frequent wage adjustments, higher project expenditure, labour shortages, delayed project execution, and difficulties in maintaining accurate cost estimates. Additionally, increased labour costs were found to negatively affect project performance by reducing profitability, increasing contract variations, and creating financial strain for contractors. The study concludes that inflation has a significant and direct impact on labour cost and overall project outcomes in the study area. It recommends stronger cost control mechanisms, regular market price updates, adoption of technology to improve labour productivity, and clearer government regulations to help stabilize the construction environment and reduce the adverse effects of inflation on labour cost.