Economic Decision-Making in Construction Ventures

Construction projects are usually complex and expensive and generally result in low profit margins. Their economic and financial aspects are often highly complex but need to be grasped in order to make rational appraisals and optimal decisions. This unique and broad-based book begins by surveying the general economic environment of the construction process. It reviews the different types of construction projects, the stages of their realization and the needs for economic decisions at each stage. It also explores the external and internal sources of data required for this purpose – the company's financial statements and control systems, statistical data publications and dedicated market surveys. It then examines the project cash-flow related to a specific realization alternative. Various methods of cash-flow analysis, aimed to indicate the desirability of each alternative and select the optimal one, are also presented. It then explores the main parameters of the cash flow in private investment projects. Models for detailed and parametric construction cost assessment, analysis of life-cycle costs and the cost of land are explored. Different types of benefits are discussed and special attention is given to the non monetary and multi-attribute benefits. The forecasting methods of future construction activity are reviewed and risk analysis is then extensively treated. Finally the economic analysis of public projects is covered. Classic economic concepts and tools are examined in a construction context, and focus is given to the distinctive nature of public projects and their economic analysis and premises are compared with those of private projects. This book serves as a text for construction management students and also civil engineers at undergraduate and graduate level, and as a solid reference for junior professionals.