Keywords:finance, construction, investment sources, the construction industry, equity capital, borrowing, investment and construction cycle.
Over the past few years, the economic situation in Russia has stabilized and can now be characterized as developing. Under the conditions of Barrier-positive trends reform the investment and construction of the complex, as providing reproductive process must not only conform to the general trends, but also ahead of them [1, p.12].
Under construction cycle is a complex of activities that provide a specific construction products (ie, construction of buildings and / or structures).
Finance capital construction, principles of their organization and functions are similar to those that exist in other sectors of the economy. However, it must be said that there is also a number of distinctive features of the industry. These features include:
1. Cycle time. This factor affects the amount of work in progress, which cover working capital. In this regard, the financial statements of the building enterprise, you can see that the work in progress is a large share in the structure of current assets.
2. The individual value of construction projects affected by climatic and territorial zones, which are under construction. This factor often leads to non-uniform flow of revenue from the rental of work performed by the effect on the individual price of the property.
3. Estimated value determines the size of the financing facility. This kind of value is established on the basis of contracts with contractors and customers.
4. The need for working capital varies in some periods of construction, due to varying degrees of labor intensity and material construction and installation work. For example, the largest material costs are usually made during the construction phase, and vice versa, finishing reduce material consumption and increased labor costs.
5. The price of constructed objects is strictly individual. This is due to the inhomogeneity of the cost.
Invested capital assets generates a construction company. In the balance sheet is reflected in liabilities. Liabilities are divided into two as: equity and debt [2, p.6].
Shareholders' equity of the construction industry include:
1. Statutory Fund. As in any other economic sector this type of equity generates an initial amount that goes to the creation of the enterprise and its active. Capital stock The Charter defines the enterprise, with a minimum size is regulated by public authorities depending on the legal form of organization.
2. Reserve Fund — is part of its own capital, which is reserved for the security of the enterprise. Constituent documents to set the size of the contingency fund. The main source of income is a construction company.
3. The structure of targeted financial assets include various special funds, which are formed for the upcoming target spend accumulated funds. These funds include fund incentives, sinking fund, upcoming markdown goods, production development fund and others.
4. Retained earnings generated by the difference between the sum of the profits and distributed its parts, including used. Essentially retained earnings is a form of reserve funds own a construction company.
5. Other forms of equity. These include, for example, payments to participants (in the payment of their income in the form of interest or dividends), the calculations for the property (if renting it) and some others, which, as mentioned above, are reflected in the first section of the balance sheet liability [3, p.11].
The structure of debt capital enterprises of the construction industry include:
1. Long-term financial liabilities. This debt financing with a term of more than one year. The main forms include long-term debt and long-term bank loans with maturities not yet due and not paid by the deadline.
2. Short-term financial liabilities. It also leveraged, but with the term of use of less than one year. The main forms include various forms of building enterprise payables (for goods, works and services, for the promissory note, on advances received, according to the calculations with the budget and extra-budgetary funds, payroll, with its subsidiaries, other creditors), short-term borrowings and loans from banks and other short-term financial obligations.
During the formation of the company's capital construction must be considered the main features of each of its constituent parts.
For example, to the characteristics of equity include:
1. Easy to attract. This is due to the fact that the decisions of changes in equity are taken by managers and / or founders of a construction company without having to obtain the consent of other businesses.
2. high-impact on the rate of return on invested capital, since the loan interest is not required.
3. Reducing the risk of bankruptcy and financial stability.
However, there are disadvantages of debt capital, which include:
1. Limit the amount borrowed, and hence the restriction of opportunities dramatic expansion of construction activities with high demand in the market.
2. Wasted opportunity to gain return on equity from the exploitation of borrowed capital.
Based on the foregoing, it must be concluded that by using only equity company of the construction industry will be in the highest financially stable state, but, on the other hand, this factor limits the growth of return on invested capital due to the impossibility of expansion of economic activity through the use of borrowed capital and, therefore, limits the growth rate of the whole enterprise.
The positive characteristics of debt capital are:
1. Extensive involvement (especially in the presence of collateral or guarantees).
2. The growth of the financial capacity of the company due to the possibility of a significant expansion of economic activity.
3. Expansion of economic activity leads to an increase in return on equity [4, p.22].
The disadvantages of the use of borrowed capital should include:
1. Difficulties in raising. Decision on borrowing take at least two economic entities (banks and lenders, the lender and the borrower), which in the negative financial position of the construction industry may refuse to issue a credit or a loan.
2. Obligation of third-party guarantees or collateral. Typically, guarantees are provided on a fee basis and require an audit of operations and financial condition of the company.
3. Reducing the level of return on assets due to the obligation to pay the accrued interest for the receipt and use of leverage.
4. Increased risk of bankruptcy due to lower level of financial stability [5, c. 24].
It follows that the use of borrowed capital for the construction industry is more profitable in terms of development and possible growth in profitability, but at the same time, this leads to a reduction of financial stability.
During the development of the construction company requires an increase in capital employed. There are several sources for the formation of their own financial resources of the enterprise and its attraction of borrowed funds [6, c.49].
Own financial resources, namely their sources are divided into two as: external and internal.
External sources include primarily equity and share capital. Increase of the share capital at the expense of the securities issue. The share capital is increased by additional capital contributions. Construction company may also increase its own financial resources, for example, by a grant of financial assistance. For such assistance include free obtained intangible and tangible assets included in the balance of construction enterprise [7, c.31].
Basic position in the internal sources of the establishment of their own financial resources withdrawn profit, which remains at the disposal of the company. Furthermore, these sources include depreciation, revaluation surpluses, plant and equipment, inventories, intangible assets and other assets.
Sources of borrowing construction company is also divided into external and internal.
External sources of borrowed funds are, first of all, the commodity and financial credit. Under the trade credit refers to the supply of goods of the construction company with deferred payment. Financial credit include bank loan, cash loan business entities, tax credit, etc.). Also to external sources of borrowed funds include bonds of a construction company; which are provided by the state and some businesses on an interest free basis [8, c 11].
The most significant position in the composition of domestic sources of borrowing belongs growth «stable liabilities». Such growth include borrowings of debt growth increment debt settlements with the budget (if in connection with the planned increase in the volume of economic activity is planned to increase the amount of tax payments); Salaries (if provided for an increase of the wage fund in the plan period); increase in debt insurance (if the planning period increases the value of property construction company, subject to compulsory insurance), and some other types of domestic debt of the enterprise. Stable liabilities are based on the fact that transfers of on a daily basis, and payments — at specified intervals.
For loans also called investment. The vast majority of investors are interested in the reduction of the investment cycle, as during this period invested money do not generate revenue. However, when an object is put into operation, it begins to make a profit. Recoupment of capital investments in Russia on average 7 to 8 years, and the facility to operate before, say, 1–1.5 months means cheapening of such an object by 1 %. This is due to the rapid turnover of capital investments. All of the above leads to the paradoxical conclusion, appreciation of construction and design and survey works for the investor can be cost effective if it will be followed shortening commissioning. Longer construction always leads to an increase in cash outflows, as removes terms teachings profit.
Decided to allocate 3 stages of investment and construction cycle:
1. pre-design stage,
2. The main period of construction,
3. facility commissioning and commissioning
At the pre-stage for the start of construction is necessary to take many decisions on the feasibility of the planned construction, identifying the sources of financing, the choice of his place, and so forth.
All decisions should be in harmony with the general plan of the village, targeted programs [9, c.81].
Environmental facilities should be designed with the latest achievements of science, so the customer at this stage it is advisable to establish contacts with relevant scientific institutions, to solve organizational issues «scientific support».
Once the decision to build the main adopted begins construction period.
The main difference between this period of the previous is that it includes the work of many organizations, which is controlled by the main contractor, and not the activity of only one general contractor.
Contractor on behalf of the Chief Engineer approves and agrees with the wishes of the customer working drawings, which is under construction. Any deviations from the plan should be consistent with the representative of the customer.
There are four stages of construction:
- Zero loop comprising construction underground part buildings, underground Communications, vol. ie. papers produced below relative mark 0.00
- Erection aboveground parts, comprising manufacturing carriers and enclosing structures, installation of Technology equipment
- Finishing work — plastering, painting, at the same time with which mounted Engineering оборудование — сантехническое, электротехническое, газоснабжение and t. d.
- Accomplishment — cleaning and planning territory around buildings, landscaping, the device paving, sidewalks and etc..
For each stage characterized by their working conditions, their machinery, their professions workers. For example, for the zero cycle is characterized by a large volume of excavation, concrete, in some cases, installation or piling works [10, 72].
The final stage of the investment and construction cycle — Putting into operation and commissioning.
Putting into operation performed acceptance committee, which includes representatives of the customer, general contractor, subcontractor, designer, bodies of state supervision, labor organizations. Customer and general contractor are Commission all necessary documentation for acceptance.
Acceptance of objects made out a special act of acceptance, which must be approved by the head of the local administration.
References:
1. Kretov AA «Financing of investment projects in housing», dissertation, St. Petersburg 2012
2. Mosquitoes KA «Assessing the impact of communication management in the investment processes in the construction of» thesis, Msc — 2010
3. Malakhov VI «Contract model in investment and construction projects», the article Moscow 2008
4. Doronin LN «Investment risk management in construction», Dissertation, Moscow 2007
5. Artamonov AA, «Risk management in construction investment», the dissertation St. Petersburg, 2003
6. Kostenko LY «The system of investment management in construction», thesis, Moscow 2004
7. VN Kozlov, «Formation and development prospects of the mortgage lending system construction in the conditions of transitive economy» thesis, Novosibirsk, 2002
8. Sayenko LK «Optimization of the financial security of road construction companies», thesis, Moscow 2008
9. Valuy AA «Improving organizational-economic mechanism of experimental construction», Moscow 2004
10. Bayandin MA «The economic rationale for the use of assets under construction», Moscow 1996.
