Impact of Exchange Rate Volatility on Building Material Prices in Nigeria: A Study of Kogi State Projects

Exchange rate volatility has emerged as a dominant macroeconomic risk affecting construction cost management in Nigeria, particularly for projects dependent on imported materials. This study investigates the impact of exchange rate fluctuations on building material prices and construction project costs in Kogi State, with reference to institutional and commercial projects executed between 2020 and 2024. A descriptive quantitative design was employed, with structured questionnaires administered to 80 quantity surveyors, contractors, and procurement managers. Secondary data on exchange rates and material price indices were obtained from the Central Bank of Nigeria and the Nigerian Bureau of Statistics. Data were analysed using correlation and regression analysis. Results show a strong positive correlation (r = 0.84) between naira depreciation and price increases for imported materials including electrical fittings, aluminium profiles, and sanitary ware. The study finds that project cost estimates prepared without explicit provisions for exchange rate risk are rendered obsolete within three to six months in a volatile currency environment. Recommendations include adoption of foreign currency indexed pricing for imported materials, structured use of provisional sums for imported components, and engagement of treasury advisory services by project clients. Government agencies are urged to prioritise procurement of locally manufactured building materials. This research contributes to construction economics knowledge in North Central Nigeria and supports the case for exchange rate risk management as a standard quantity surveying service. Keywords: exchange rate, building materials, project cost, Kogi State, construction economics