A Predictive Model of Contractor Financial Effort in Transport Infrastructure Projects

Abstract

With high complexity, duration and size, the transport infrastructure projects are very often delayed and over budget. One of the frequent reason these type of construction projects behave in such way is the lack of liquidity at the construction company level. On one hand, due to the aggressive competition, the contractors participate in tenders with smaller prices, on the other hand, they confront with a large number of risk events in the execution. All of these have tremendous effects on the company cash flow, leading to delays in project execution, over budget, penalties and loss of opportunities.Different type of transport infrastructure projects are characterized by certain shapes of contract value distribution in time, determined by their complexity, technical and organizational aspects. The paper propose a simplified model to quantify the contractor financial effort using a linear functions for several types of transport infrastructure projects. Six real projects implemented in Romania are analyzed considering different criteria which affects the contractors’ financial effort and help to validate the model.The goal of the research is to establish a relationship between the contractor financial effort and project technical, organizational and contractual aspects, leading to a decision making tool both in the biding phase and in the execution phase.