Cost optimization of an investment project based on contract strategies
Scientific Papers of Silesian University of Technology. Organization and Management Series
Purpose: The article presents the actual problem of determining cost of construction project implementation. Within the conducted research, an analysis of existing approaches to managing project costs in the face of uncertainty was carried out, including the justification of the possibility of using the contract system for the purpose of optimizing the project, as well as identification of possibilities of cost engineering. Design/methodology/approach: A Case-study method, based on an
... of the performance indicators of an investment project for the construction of a city boiler house and the project cost analysis using the Earned Value Technique, was used to prove the hypothesis about the effectiveness of using cost engineering. Findings: The results of evaluating the effectiveness of project implementation was substantiated, and the feasibility of applying the EPC contract for the cost optimization was proven. The projects implemented with the EPC contracts have a high potential. EPC/M contracts are widely used in other countries, but in Russia, this type of contract is just beginning to be used. Originality/value: In the result of the analysis, it was revealed that the main factors affecting the cost of the boiler house implementation construction project were the imperfection of the pricing system, the presence of unrecorded work and costs, the inadequacy of the rationing system; the violation of technology and timing of implementation.