Financing Cost Optimization in Construction Sector: A Review

  • Saja Hadi Aldhamad College of Engineering - University of Baghdad
  • Sedqi Esmaeel Rezouki College of Engineering - University of Baghdad
Keywords: Financing alternatives, Project financing cost, Cash flow forecast, Work schedules, Project financing optimization.

Abstract

The main aim of this research is to introduce financing cost optimization and different financing alternatives. There are many studies about financing cost optimization. All previous studies considering the cost of financing have many shortcomings, some considered only one source of financing as a credit line without taking into account different financing alternatives. Having only one funding alternative powers, restricts contractors and leads to a very specific financing model. Although it is beneficial for the contractor to use a long-term loan to minimize interest charges and prevent a substantial withdrawal from his credit line, none of the existing financial-based planning models have considered long-term loans in their models or included a schedule of borrowed money and a repayment schedule with interest rates. The aim of this study is not only to eliminate the shortcomings of previous studies but also to incorporate a financing optimization model for various funding alternatives available to contractors in terms of funding sources and forms, cash provision times, interest rates and repayment options. This work proposes a financing optimization model, not only to remove the limitations but also to find optimal financing costs while offering the financing schedule without increasing the project duration and adjusting the starting times of the activities.

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Published
2020-10-01
How to Cite
Aldhamad, S. and Rezouki, S. (2020) “Financing Cost Optimization in Construction Sector: A Review”, Journal of Engineering, 26(10), pp. 94-108. doi: 10.31026/j.eng.2020.10.07.