The short version
When you mix cement, sand, aggregate and water, the dry materials pack together and water fills the voids between particles. The finished, compacted concrete takes up less space than the loose dry ingredients did. So to get one cubic metre of finished concrete, you must start with more than one cubic metre of dry material.
Where 1.54 comes from
The dry, loose ingredients occupy roughly 52–54% more volume than the wet, compacted concrete. Expressed as a factor, that is about 1.52 to 1.54. This tool uses 1.54, the most common value in Indian practice.
So: dry volume = wet volume × 1.54. For mortar and plaster, a smaller factor of about 1.33 is used.
Why dry materials take more space
Picture a bucket of dry aggregate: between every stone there is an air gap, and the sand only partially fills those gaps. Cement powder fills more, but voids remain throughout. When you add water and mix, the cement paste flows into every gap and the whole mass is compacted as it is placed and vibrated. The air is driven out, so the finished concrete occupies noticeably less volume than the loose ingredients did. The 1.54 factor simply reverses that: it tells you how much loose dry material to start with to end up with the volume of finished concrete you need.
Concrete 1.54 vs mortar 1.33
Concrete and mortar use different factors because they contain different materials. Concrete includes coarse aggregate (20 mm stone) whose large particles leave bigger voids, so it bulks up more — about 54%. Mortar and plaster contain only fine aggregate (sand) with smaller, more uniform particles and tighter packing, so they bulk up less — about 33%. Using 1.54 for plaster would over-order materials; using 1.33 for concrete would leave you short. Always match the factor to the material.
Why the number isn't exact
The 1.54 value is a practical average, and you will see anything from 1.52 to 1.57 quoted. The real bulking depends on how well-graded the aggregate is (a good spread of particle sizes packs more densely, lowering the factor), how dry or damp the sand is when measured, and how thoroughly the concrete is compacted on site. For estimating purposes 1.54 is the standard, but it is a rule of thumb rather than a code-mandated constant, which is why this site labels it honestly as such.