What are Escalation and reconciliation?

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Accepted Answer

Escalation refers to the increase in costs of materials, labor, etc. over time. Reconciliation is the process of comparing estimated costs with actual costs.

Escalation is the adjustment of costs to account for inflation, market trends, etc.
Reconciliation involves comparing estimated costs in the initial budget with the actual costs incurred during the project.
Escalation and reconciliation are important in ensuring the project stays within budget and to identify any discrepancies.
For example, if the cost of steel increases during the project, escalation clauses in contracts may be used to adjust the price.
Reconciliation helps in identifying areas where costs may have been underestimated or overestimated in the initial budget.