ABSTRACT
The construction sector is known as a major contributor to the overall development and expansion of the country's economy and any delay in a project may cause a cascading effect on the country's economy. In 2020, most countries have been affected by the COVID-19 pandemic that had a significant impact on construction projects resulting in project delays and project cost overruns. This paper identifies factors that influence the project cost escalation due COVID-19 pandemic and studies the escalation of main construction materials. Questionnaires were conducted online to the target respondents who were involved in the construction projects during the COVID-19 pandemic. The research area covers the Klang Valley which is centered in Kuala Lumpur and includes its adjoining cities and towns in the state of Selangor. The findings of this study reveal that the Standard Operating Procedure (SOP) imposed by the government has significantly increased the project cost, such as hand sanitizer, face masks and Rapid Test Kit (RTK) provided to the workers. As a result, the contractor companies have suffered in maintaining their finances as they have to continue to pay their workers in full even when the companies are still surviving the epidemic of COVID-19. The findings of this study may assist construction parties as well as government bodies in strategically planning the finances in dealing with a similar pandemic situation in the future. © 2022 ISEC Press.