The Problem of Exceeding the Cost of Construction and New Opportunities to Solve it at the Stage of Project Preparation

Abstract

The article discusses the problem of exceeding the planned cost of construction, sources of origin and ways to manage the risk of the need for additional financing of construction at the stage of project preparation. The possibilities of solving the problem by substantiating the reserve funds for unforeseen works and costs on the basis of the process approach and the digital model of distributed risk assessment are considered. In order to improve the reliability of determining the cost of construction, the dependence of the reserve funds for unforeseen works and costs, risk cost and risk degree is determined. An example is given of substantiating the reserve funds for unforeseen works and costs in the composition of the summary budget calculation of capital repair of the 1st Yelagin bridge over the Srednyaya Nevka river in Saint-Petersburg taking into account project design, production, technology, pricing, contractual and inflationary risk factors.

Distributed Assessment of the Risk of Exceeding the Project Deadlines and Recommendations for Improving its Sustainability

“…Продолжительность и ожидаемые сроки проекта устанавливаются в графике проекта на основании действующих норм либо задаются директивно с учетом жизненного цикла и целей проекта. Увеличение продолжительности и сроков влечет за собой рост срока окупаемости проекта, который является одним из основных показателей эффективности проекта [10]. При принятии инвестиционных решений большинство инвесторов ориентируются именно на этот критерий эффективности проекта.…”

Proactive mechanisms for response to risks of business entities engaged in investment and construction activities

“…This is evidenced by the analysis of scientific literature on the topic under study. For instance, basing on the study of three risks -the predictors of construction costs increase: design and documentation; real estate object operation; and management risks for the construction object cost increase, the work [1] proposes consideration of social sustainability requirements at the early stages of the project Of particular significance for this work is the publication [15], which considers the problem of the construction target cost overrun, the sources of occurrence and risk management methods of the need for additional financing of the construction at the project definition phase. The dependence of back up funds for contingency works and costs, the cost and level of risk is found.…”