Impact of Diesel Pricing on Construction Projects in India and its Mitigation Measures An Empirical Analysis

Abstract

Construction is an important sector which greatly contributes to a nation s economic newlinegrowth. This is one of the first industries that humankind developed, which still newlinecontinues to influence our lives in unique ways. Practically all other businesses rely newlineon the construction industry to provide them with the infrastructure facility. Besides, newlineit generates substantial employment for many people and provides a growth impetus newlineto other sectors through backward and forward linkages. newlineConstruction is a capital-intensive business that needs large amounts of capital newlineinvestment in fixed assets such as tools, heavy equipment, and vehicles. Similarly, newlineanother major area of concern is cash flow management which is important for the newlinesurvival of any construction company. Maintaining a healthy cash flow makes it newlinepossible to pay debts and expenses, reinvest in the business, and maintain a buffer for newlineemergency situations. Failure to maintain an adequate level of capital and proper cash newlineflow may lead to the failure of a construction company. newlineThe opportunities in construction are growing, but so is project complexity. Any newlinecontractor bids with the anticipation that if the project is awarded, it will bring him newlinerevenue plus profits and further that project will provide the continuity to remain in newlinethe construction industry, hence expanding his business. With companies already newlineoperating under razor-thin profit margins, a single surprise can wipe out profits for the newlinewhole company. newlineEvery project has a specific set of objectives and constraints, and its construction is to newlinebe carried out on schedule, within the budget, in accordance with specified quality newlinestandards and the terms and conditions set out in the agreement. Depending on the type newlineof project, its completion usually takes several months to several years. There is newlinetherefore a probability that the cost of resources may rise or fall, to a greater or lesser newlineextent during the life of the project. Whereas, at the time of the bidding, contractors newlinequote their prices on the basis of projected est