With the prices of major inputs, including cement, steel, aggregates and labour, increasing, their options are limited. But they cannot afford to wait for the market conditions to change.

Time is one key factor in saving, they say. Speeding up project completion contributes to reducing costs. Other ways to save include value engineering and sticking to basics in design -- that is doing away with the `bells and whistles' as one developer put it. No more flourishes in design, no more costly architects and consultants, they say.

Escalation clause
While acknowledging that increasing the sales price is not an option, developers are examining ways to transfer further increases in cost of cement and steel to buyers through an escalation clause in the purchase agreement.

The agreement would provide for price escalation or decrease linked to steel and cement prices.

Under the existing conditions, this proposal meets with stiff resistance not just from the market but also the marketing department within the company, says a developer!

But an escalation clause is on the cards and developers in Chennai, Bangalore and Mumbai are examining the options and working with lawyers on how to go about it, according to K Murugesan, Vice-President, Confederation of Real Estate Developers Association of India, and Director, True Value Homes India Pvt Ltd. He expects that the escalation clause would be in place in the next couple of months.

For now the options are primarily austerity measures -- cut back on any expenditure that can be avoided, says Surendra Hiranandani, founder of Hiranandani Upscale. Developers will look across the board in material and design to cut back on costs, slow down on expansions and bring down waste. Designs would have to be more functional. The challenge would be stay within the budget. Saving on time is the biggest cost factor.

Using Technology
R Kumar, Managing Director, Navin Housing and Properties Pvt Ltd, says technology holds the key to savings on time. Most large developers expect aluminium form work system, involving use of concrete for the entire structure, to become the norm in the coming years.

This does away with manual brick laying and plastering because the entire structure is essentially poured concrete. Speed of construction would increase three-fold. Each floor could be done in a week as compared to three-four weeks using conventional systems. A three-year project could be completed in one year; a significant saving, considering that the cost of construction has gone up by 40 per cent in the last one year.

Also, with the cost of funds between 15 and 30 per cent, developers can save big.