Academic literature on the topic 'Factors Affecting Construction Duration'

This paper reviews a ship design and construction case study in the context of the published literature on the design process and its impact on construction. The objective was to explore the factors that impact design and construction lead time and cost. Design and construction managers constantly experience pressure to accelerate the construction start time in an environment characteristic of frequent design changes and rework. Often the construction of the first ships of a series will aggressively overlap the design phase. This investigation assessed a case study that illustrated that as the degree of overlap between design and construction increases, design changes increased ship construction costs and duration. This negates the advantage of trying to reduce lead time by overlapping phases. Before strategies of overlapping are utilized, shipbuilders need to better understand the details of the design process and its integration with other functions to improve design quality and reduce the impact of design changes on manufacturing and construction. It is recommended that when overlapping strategies are considered, design changes and their impact on construction be factored into the decision. A better strategy would be to eliminate design quality issues and design and construction rework.

AbstractThe selection of the formwork system for high rise building affects the entire construction project duration and cost. The study reports the factors influencing the selection of different formwork system in the construction of high rise buildings through structural questionnaire survey from the client, contractor, consultant, and interviews with expert members. Total of 40 technical factors was identified from the literature and 220 filled questionnaires were received from the respondent. Relative Importance Index method is used to find the topmost factors affecting the selection of formwork system. Additionally, from factor analysis 22 factors were identified to have a correlation with one another. Regression analysis reveals that duration of the project, maintenance cost, adaptability, and safety have impact on formwork selection across time, cost and quality. These findings could potentially increase the construction company’s existing knowledge in relation to formwork selection.

In this research the influence of natural and climatic conditions on the organization of construction production are examined. Our purpose was to identify the nature of the dependence of the duration of construction work on natural and climatic factors. The analysis of normative and technical documentation in terms of accounting for the influence of natural and climatic factors was made. The system of estimation of influence of natural conditions on preparatory, ground, facade, roofing works, and also the appliance of monolithic structures, installation of prefabricated ferroconcrete items, and on works – implementation of internal finishing is offered. It was estimated, that the norms of construction production take into account a certain number of natural and climatic factors affecting the performance of work, but most of these factors have not yet been given in the normative and technical documentation. It is necessary to study this issue more comprehensively and to establish exact dependences on natural and climatic conditions, which will allow to quantify these factors already while calculating. This is necessary to compile more accurate calendar plans and schedules of production of works, as close as possible to real conditions. The study of this issue is one of the most important issues in the design of construction production. With insufficient consideration of these factors, the final actual figures are very different from the projected ones, which also lead to an increase in the cost of construction and installation work and the duration of their implementation. Taking into consideration the influence of natural and climatic factors will allow planning construction production more accurate.

Abstract The basic element of a project organizing construction works is a schedule. The preparation of the data necessary to specify the timings of the construction completion as indicated in the schedule involves information that is uncertain and hard to quantify. The article presents the methods of building a schedule which includes a fuzzy amount of labour, time standards and number of workers. The proposed procedure allows determining the real deadline for project completion, taking into account variable factors affecting the duration of the individual works.

In both developing and industrialized countries, deviation from a planned time schedule is one of the most frequently encountered problems in construction investments. Various factors faced with during construction period prevent systematic flow of work, which causes time-based anomalies as a conclusion. Considering the vital importance of the construction industry on the macro-economic structure of a country, it is inevitable to be aware of considerable effect of the timely completion on the allocated project budget. In this study, causes of time extensions in the Turkish construction industry and levels of their importance were examined together. In total, 34 factors affecting project duration were taken into account. A questionnaire survey, including these factors, was then applied to 71 construction companies in Turkey, and the outcomes were evaluated by means of statistical analyses. According to the results, “design and material changes” was found to be the most predominant factor, followed by “delay of payments” and “cash flow problems”. In terms of importance levels of factor groups, financial factors were found to be the first group, while environmental factors were the least effective group. It should be also noted that managerial causes of time extensions are encountered in developed and developing countries, whereas financial causes are experienced in developing countries only.

Purpose In Ghana, the duration of construction projects from inception to completion is becoming a great concern, recently, especially among clients and beneficiaries, because of the rising interest rates, inflation, development plan targets, among other factors. Hence the need to understand the causes of delays and cost overrun in the construction sector has become more important than ever. This study therefore aims to identify the major factors underlying time and cost overruns in projects related to the education sector in Ghana to proffer practical solutions in addressing them. Design/methodology/approach The study conducted a survey among clients’ consultants and representatives of the contractors working on about 60 government school projects. A relative importance index was used to determine the relative effects of the factors causing construction time and cost overruns. Findings The key factors causing construction time overrun were: financial problems, unrealistic contract durations imposed by clients, poorly defined project scope, client-initiated variations, under-estimation of project cost by consultants, poor inspection/supervision of projects by consultants. Other factors were underestimation of project complexity by contractors, poor site management, inappropriate construction methods used by contractors and delays in the issuance of permits by government agencies. Factors affecting cost overruns were financial difficulty by client, delays in payments of completed works, variations in designs, lack of communications plans, poor feasibility and project analysis, poor financial management on site and material price fluctuations. Research limitations/implications The research was limited to only the educational sector projects. Practical implications Practically, this study highlights for the construction sector the critical factors causing project time and cost overruns in Ghana. Identification of these factors provides the basis for pragmatic solutions to enhance the chances of project success. Social implications The identification and solutions to project time and cost overruns, especially for educational sector projects, contribute toward making public goods more affordable and accessible to most citizens, particularly in developing countries. Originality/value This study contributes to the debate on factors causing project time and cost overruns in the construction sector especially from a developing country’s perspective.

The Egyptian construction industry suffers from severe delays and cost overruns. Rework is a prime cause of this challenge. Therefore, the objective of this study to identify the root causes of rework for Egyptian construction projects and their impact on the project duration and cost. An extensive literature review has been done to identify the most common factors affecting rework. Hence, eighty-seven factors were identified and categorised into ten groups. Structured interview technique was adopted to get the opinions of 67 Egyptian construct professionals for nineteen different construction projects. Total Importance Index of Rework Impact (T.I.I.R.I%) was used to analyse and rank rework factors. Accordingly, the most critical five rework factors are economic situation for the country, schedule compression, design changes, specifications change, and inadequate feasibility study. Based on the survey results, the project stakeholders should consider the critical rework factors during the planning stage and before the project execution, to eliminate or reduce the occurrence and impact of rework causes and to improve the performance of the projects. This paper provides state of the art for rework causes and their effects on construction projects performance, and it can be beneficial for both practitioners and researchers for future work.

Construction projects experience various problems and complex factors such as cost, duration, quality and safety. Construction sector is diverse as it contains sub-contractors, contractors, consultants, architects, owners, and others. The aim of this paper is to identify and analyze resource management issues in construction project. Other than that is to ascertain the significance of the resource management as one of the key element in construction project success. A literature review and a questionnaire survey were done for data collection and analyzed using Relative Importance Index and Cronbach’s alpha. The questionnaires were distributed to the team members of KLIA 2 – New Low Cost Terminal Project: Client, Architects, Main Contractor, and Sub-Contractor. The findings revealed that dependent on foreign workers to respond to the high demand of skilled workers, weather condition affecting machineries/equipment-work-related performance and weaknesses in quality assurance for the supply of construction materials should be given serious attention in order to ensure the productivity and financial performance of the projects. Keywords: Construction Project Management, Resource Management, Manpower, Machineries, Materials

The duration of construction of a project depends on many factors, such as: cost, location, site characteristics, procurement methods, area of construction, footprint of the building and its height, etc. It is very important to be able to predict these durations accurately in order to successfully complete a project on time. Various construction duration estimation tools have been developed to make accurate predictions, as &ldquo
time is money.&rdquo
The main objective of this study was to develop a model that can be used to predict the construction duration of a project in a reliable and practical way. Contractors can thus use a project'
s characteristics, as given in the tender documents, to estimate the actual amount time it would take them to complete the construction works. In this study, factors affecting the duration of a construction project and models for estimating construction durations were investigated. Within this framework, duration estimation models such as
Bromilow&rsquo
s Time-Cost (BTC) Model and Building Cost Information Service (BCIS) Model were used while Simple Linear Regression (SLR) and Multiple Linear Regression (MLR) analyses were conducted on data related to seven case study buildings that are situated at the Middle East Technical University (METU) campus in Ankara. This data was obtained from the Department of Construction and Technical Works (DCTW) at METU. The closeness in estimation of the regression analyses was investigated and finally an MLR model was obtained which was based on two parameters
the area of the building and the area of its faç
ade. On the other hand, as opposed to studies reported in literature, the effect of cost on duration was not seen to be significant.

Reliable productivity rates for construction trades are essential for contractors to accurately estimate the time and cost of construction projects. These rates vary considerably based on the complexity of the structure, project site constraints, and other technical, managerial, social and cultural factors. Predicting the effect of these factors will enhance the ability of the contractor to optimally utilize resources. This research therefore aims to evaluate the most significant factors that affect productivity of key construction activities namely: excavation, formwork, reinforcement, concreting, blockwork, plastering and tiling. The research focuses on the construction industry in the UAE (United Arab Emirates).

This study investigates the factors that affect the profitability of construction companies in Hong Kong. Profitability refers to income less expenses before taxes, or net operating income, as a percentage construction business turnover (value of construction work done). Profitability is an important indicator of a company’s competitiveness and is also a key performance indicator of the quality a company’s management. This study attempts to measure and explain the observed variations in profitability across construction companies. In this study, I have used construction company production data collected from the Census and Statistics Department (CSD). The data set contains income and expenses data of groups of construction companies classified according to HSIC (Hong Kong Standard Industrial Classification) down to four-digit level over the period 1981 to 2002. The data set was used for empirical analysis. After controlling for depreciation of fixed assets, variation in cost of capital and income from other businesses, our data show that profitability varies with company size, degree of subcontracting and material content. The results suggest that as the size of a construction company increases, profit margin declines initially. Profit margin then increases as size increases beyond a certain size, which suggests increasing return to scale. The scale effect, however, diminishes slowly and then exhausted when size of the company grows beyond the optimal level, after which the company will experience decreasing return to scale. Empirical data from Hong Kong showed that there were only a very small number of "over-sized" construction firms that operated beyond the optimal size. This suggests the construction companies in Hong Kong are profit orientated and would not expand beyond the optimal level to achieve other non-profit objectives. In addition, I also found that both the degree of sub-contracting and the level of material content have significant negative impact on the profitability of construction companies in Hong Kong. The former result suggests that profit margin declines as more works are subcontracted out. This implies that in addition to provision of physical resources, subcontractors are also paid for their efforts in managing resources, specialist knowledge and risk taking. The negative impact of material content on profitability suggests that the construction material market is a very competitive market. A construction company cannot charge a significant premium (larger than its profit margin) for provision of construction materials as the construction client or main contractor can also purchase the material at more or less the same price. The results of this study shed light on our understanding of factors that affect the profitability of the construction contracting business, an area that serious lacks empirical study. In addition, the results provide valuable information for the decision makers of construction companies when tendering for construction work and for benchmarking of the profitability performance of their companies. Construction clients and cost consultants would also find the results useful for construction cost budgeting and estimating.
published_or_final_version
Real Estate and Construction
Doctoral
Doctor of Philosophy

Knowledge of construction duration is pertinent to a number of project planning functions prior to detailed design development. Funding, financing, and resource allocation decisions take place early in project design development and are significantly influenced by the construction duration. Currently, there is not an understanding of the project factors having a statistically significant relationship with highway construction duration. Other industry sectors have successfully used statistical regression analysis to identify and model the project parameters related to construction duration. While the need is seen for such work in highway construction, there are very few studies which attempt to identify duration-influential parameters and their relationship with the highway construction duration. This research identifies the project factors, known early in design development, which influence highway construction duration. The factors identified are specific to their respective project types and are those factors which demonstrate a statistically-significant relationship with construction duration. This work also quantifies the relationship between the duration-influential factors and highway construction duration. The quantity, magnitude, and sign of the factor coefficient yields evidence regarding the importance of the project factor to highway construction duration. Finally, the research incorporates the duration-influential project factors and their relationship with highway construction duration into mathematical models which assist in the prediction of construction duration. Full and condensed models are presented for Full-Depth Section and Highway Improvement project types. This research uses statistical regression analysis to identify, quantify, and model these early-known, duration-influential project factors. The results of this research contribute to the body of knowledge of the sponsoring organization (Virginia Department of Transportation), the highway construction industry, and the general construction industry at large.
Ph. D.

Poor cost performance of construction projects has been a major concern for both contractors and clients. The effective management of risk is thus critical to the success of any construction project and the importance of risk management has grown as projects have become more complex and competition has increased. Contractors have traditionally used financial mark-ups to cover the risk associated with construction projects but as competition increases and margins have become tighter they can no longer rely on this strategy and must improve their ability to manage risk. Furthermore, the construction industry has witnessed significant changes particularly in procurement methods with clients allocating greater risks to contractors. Evidence shows that there is a gap between existing risk management techniques and tools, mainly built on normative statistical decision theory, and their practical application by construction contractors. The main reason behind the lack of use is that risk decision making within construction organisations is heavily based upon experience, intuition and judgement and not on mathematical models. This thesis presents a model for managing global risk factors affecting construction cost performance of construction projects. The model has been developed using behavioural decision approach, fuzzy logic technology, and Artificial Intelligence technology. The methodology adopted to conduct the research involved a thorough literature survey on risk management, informal and formal discussions with construction practitioners to assess the extent of the problem, a questionnaire survey to evaluate the importance of global risk factors and, finally, repertory grid interviews aimed at eliciting relevant knowledge. There are several approaches to categorising risks permeating construction projects. This research groups risks into three main categories, namely organisation-specific, global and Acts of God. It focuses on global risk factors because they are ill-defined, less understood by contractors and difficult to model, assess and manage although they have huge impact on cost performance. Generally, contractors, especially in developing countries, have insufficient experience and knowledge to manage them effectively. The research identified the following groups of global risk factors as having significant impact on cost performance: estimator related, project related, fraudulent practices related, competition related, construction related, economy related and political related factors. The model was tested for validity through a panel of validators (experts) and crosssectional cases studies, and the general conclusion was that it could provide valuable assistance in the management of global risk factors since it is effective, efficient, flexible and user-friendly. The findings stress the need to depart from traditional approaches and to explore new directions in order to equip contractors with effective risk management tools.

It is accepted that CCPP has the highest fuel conversion efficiency among fossil fuel fired generation technologies. The extensive installed base of CCPP worldwide is justified by additional advantages: low capital investment, short construction time, low environmental impact and high operating flexibility. The operating flexibility, with fast loading and deloading and short start-up and shutdown durations, allows CCPPs to fulfill a wide range of operating duties, such cycling, intermediate load to base load, grid frequency or voltage control and part load operation; mostly on a competitively generated cost basis. The traditional approach to CCPP development is to design an optimised plant, taking into consideration the technical and economic boundary conditions of a specific project. This includes assumptions for operating regime: base load, intermediate load or cycling with daily start-up and shutdown. In a deregulated environment, plants are dispatched on merit. The assumptions related to operating regime and used for optimising the configuration of a particular CCPP, often deviate significantly during commercial operation. The objective of this work is to evaluate the impact of the operating regime on CCPP economic performance. During the economic feasibility evaluation of a power project it is frequently considered that the main factors affecting the electricity generation cost, are capital cost and fuel cost. As far as the operating regime is concerned, a number for yearly operating hours is then assumed and eventually sensitivity is considered. The content of this work is an investigation on how the capital, fuel and O&M costs, components of the generation costs, are affected by the utilisation factor, by operating modes and loads, frequency and duration of start-up and shudown [s&s] of the plant. The conclusion of the paper is that both, operating regime and operating procedure have an important impact on economic performance of combined cycle plants. Annual operating hours and the number of s&s influence the factors which contribute to the profitability and competitiveness of the plant, such as EOH, availability, performance degradation, O&M costs and directly the average plant output and efficiency. Finally the economic performance of combined cycle plants can be significantly improved by re-visiting the conceptual design and the operating concept.

Heat flux measurements were performed in an air-cooled utility engine using a fast-response coaxial-type surface thermocouple. The surface heat flux was calculated using both analytical and numerical models. The heat flux was found to be a strong function of engine load. The peak heat flux and initial heat flux rise rate increase with engine load. The measured heat flux data were used to estimate a global heat transfer rate, and this was compared with the heat transfer rate calculated by a single-zone heat release analysis. The measured values of heat transfer were higher than the calculated values largely because of the lack of spatial averaging. The high load data showed an unexplainable negative heat flux during the expansion stroke while the gas temperature was still high. A 1D and 2D finite difference numerical model utilizing an adaptive timestep Crank-Nicholson (CN) integration routine was developed to investigate the surface temperature measurement. Applying the measured surface temperature profile to the 1D model, the resultant surface heat flux showed excellent agreement with the analytical inversion solution and captured the reversal of the energy flow back into the cylinder during the expansion stroke. The 2D numerical model was developed to observe transient lateral conduction effects within the probe and incorporated the various materials used in the construction and assembly of the heat flux sensor. The resulting average heat flux profile for the test case is shown to be slightly higher in peak and longer in duration when compared with the results from the 1D analytical inversion, and this is attributed to contributions from the high thermal diffusivity constituents in the sensor. Furthermore, the negative heat flux at high load was not eliminated suggesting that factors other than lateral conduction may be affecting the measurement accuracy.

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.