Construction Finance

The calculation of the financial component of production is extremely important. In comparison with the finances of other enterprises, construction has a certain specificity inherent only in this sector of the economy. It is due to the fact that the cash flow is special, it requires additional calculations for such expenditure items as construction machinery and equipment, settlement training, assessment of land properties and other.

Cash flow budget

The basis of the financial component of any production process is the cash flow budget. The project budget for construction is formed in advance and must take into account the following components:

• geological examination of the construction site and soil assessment;
• development and approval of the production plan and Accounting for ancillary production;
• direct execution of construction works;
• Final peer review, construction analysis and commissioning.

The construction work has been going on for a long time, so their construction finances must be covered by the working capital's working capital. Thus, the profit and return on investment can not be fast. Raising funds for production should have meaningful sources. Thus, the cash flow budget must be formed taking into account the general financial condition of the construction organization and its ability to conduct business activities on several construction sites simultaneously. In the general case, the project budget in construction is formed taking into account the main participants in the construction, which are:

• developer;
• contractor;
• The authorities that provided the site, construction finance and control it.

In addition, the construction phase itself, in which the cash flow is the most complex, provides for expanded construction finance between the three groups, namely

• investors, lenders and borrowers;
• real estate sellers and buyers;
• intermediaries;

But the main financial management in construction is the developer, it is his cash flow budget that is the most complex and meaningful. After a long time of the construction phase, the profit from economic activity comes unevenly. At the same time, the construction stage itself implies uneven financial costs, because at certain stages their dynamics change in the soul of a wide range. This places special demands on working capital and a budget for internal settlements. Need Journal of KB works. The next feature is the analysis in construction and the calculation of the estimated cost, which affects the cost of work and profit generation. An important component that affects the cash flow is also the individual value of the object due to the peculiarities of its location.

Estimated cost

Estimated cost is one of the main concepts used in financial calculations in production. In general, the estimated cost of construction is the amount of money needed by the developer to build the facility in accordance with the design materials. If construction does not involve additional costs, the estimated cost consists of the following components:

• construction work;
• installation work;
• cost of construction of equipment and inventory;
• Other work and costs for construction machinery and equipment.

Construction work includes general work and special work. The first includes work on the erection and installation of building structures, and the second includes sanitary work, construction of communication lines, landscaping. Installation work is all work on the installation of equipment except for the construction of foundations for their installation. About the development of estimates Financial Management in Construction takes into account some other internal calculations, as well as some taxes, including VAT on projects for work. Estimated cost is directly related to the direct costs of construction and installation work. Their volume is determined by direct calculation and depends on the amount of work, required resources, estimated norms and prices for resources. Direct costs include the following construction finance:

• construction machinery and equipment - cost;
• costs of basic wages of builders;
• The cost of operating construction machinery and equipment, including the wages of workers-drivers.

Please note that the estimated cost of materials, parts and structures includes the cost of purchasing them and the costs associated with delivery to the warehouses near the construction site. The cost of operation required by construction machinery and equipment includes the costs provided by the estimated norms for construction and installation of equipment, including depreciation, the cost of fuels and lubricants, the cost of all repairs, relocation , salaries of car operators. In-house calculations include the cost of salaries to builders and those who deliver construction materials to the construction site. It should be noted that additional salaries of builders are also included in the cost of production and use of Programs for construction. This is done with the help of overhead costs, which are used to compensate for the costs of construction companies associated with the general conditions of the construction process (eg, maintenance, organization and management of production).

Construction machinery and equipment

The estimate in the estimate, which includes construction machinery and equipment, directly depends on the cost of using them. These costs are indicated in the machine hours of their operation. This indicator is calculated using the original data from specialized collections of normative displays. The estimated price for the operation of construction machinery and analysis in construction provides:

• Fixed operating costs, including depreciation deductions for the complete restoration of machines, mechanisms, taking into account their delivery to the construction site.
• Variable operating costs, including salaries of machine operators, the cost of replacing parts that wear out quickly, the cost of fuel and lubricants, non-repair and maintenance of machines, diagnostics, etc.
• One-time payments, including relocation from one construction site to another construction machinery and equipment.