Escalation

Escalation refers to price changes over time and is sometimes referred to as Indexation. For example, if the initial projection is priced in year one, for a life cycle spanning several years, then actual costs could be higher than the initial pricing, simply as a function of inflation over time. To harmonise comparisons between projection comparisons, escalation is applied to budget prices to adjust these values to current levels.

Future projections of both current and budget projections are made at today's escalated values.

Summary of Cost Escalation Rules In AMT

Projection Type	Actual Costs	Future Costs
Budget	Not escalated	Not escalated.
Current and Alternate	Not escalated	Escalated to today's value.
Archived	Not escalated	Escalated to the point of archiving.