Construction sector is known as a major contributor to the overall development and expansion of the countryâs economy to which any delay to project may cause a cascading effect on the countryâs economy. In 2020, most of the countries have been affected by the COVID-19 pandemic that had a significant impact on construction projects resulting in project delays and project cost overrun. 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 mask 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 pay their workers in full even when the companies are still surviving the epidemic COVID-19. The findings of this study may assist construction parties as well as the government bodies to strategically plan their financial in dealing with the similar pandemic situation in the future.