International Research Journal of Engineering and Technology (IRJET)
e-ISSN: 2395-0056
Volume: 12 Issue: 05 | May 2025
p-ISSN: 2395-0072
www.irjet.net
A comprehensive study on key performance indicators for finance management in construction projects: a case study approach Ezhil R. Sharon1, Fathima Taskeen2, Indra Priya3 Post-Graduate Student, Faculty of Architecture, Dr. M.G.R. Educational and Research Institute. Chennai, India Asst. H.O.D, Faculty of Architecture, Dr. M.G.R. Educational and Research Institute. Chennai, India Add. H.O.D, Faculty of Architecture, Dr. M.G.R. Educational and Research Institute. Chennai, India ---------------------------------------------------------------------***---------------------------------------------------------------------
Abstract - This research examines the role that financial
poor financial practices and there should be standard financial KPIs.
Key Performance Indicators (KPIs) can play in the management of construction projects in order to promote budget compliance, liquidity, and risk management. The case study examined the Chennai One World project in order to identify specific financial KPIs that impacted the project's excessive cost overruns, liquidity and time delays. The financial KPIs examined are the Cost Performance Index (CPI), Return on Investment (ROI), and Cash Flow Ratio (CFR). The Institute of Corporate Directors Principle (80/20 Principle) is the foundation of the research financial KPIs, which emphasized the top 20% of KPIs that had 80% of the impact in a building project. The developed framework assisted in proactive governance of financial decision making and continuous monitoring through benchmarking and experts reviews in real-time. The research results highlighted the importance of supplier control, liquidity, and strategic budgeting to achieving supplier management goals. The research results emphasized that all three elements are significant to achieving project and financial success. The framework was a practical and scalable approach in increasing financial transparency, reducing cost overruns and financial risk in construction projects.
2.1 Identified Research Gap and Need for Further Study We've use time, safety, and quality KPIs, but there isn't a standard in financial KPIs, and no way to accurately represent overall financial health. Many gaps between real time data, coordination with different stakeholders, tracking risks, etc. makes immediate research into financial KPIs imperative. This thesis addresses financial performance evaluation vs planning with an emphasis on financial KPIs and provides a framework that can be adapted and validated using practical case studies.
2.2 Financial Management in Construction A construction project's outcome is greatly affected by how finances are managed and allocated, estimated, budgets are developed, and financial risk is managed. Effective budgeting, funding, and financial planning helps with steady cash flow, reduces risk, and minimizes delays created by funds being limited.
Key Words: Financial Management, Construction Projects, Key Performance Indicators (KPIs), Cost Control, Budget Adherence, Risk Management, Project Success, Strategic Decision-Making
In construction, financial planning, budgeting, and project funding:
1.INTRODUCTION
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Financial management is critical to control costs, manage liquidity, and deliver work on time in the construction industry. However, the industry has not applied financial KPIs consistently as a collective whole. The study closes this research gap by proposing a formal KPI model to enhance financial predictability and transparency.
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Financial Risks Associated with Construction Projects: The impact of financial risks on construction projects can be catastrophic, resulting in both severe delays and cost overruns. Financial risks include funding deficiencies, problems at the construction site, as well as uncertainty in construction costs. By monitoring works projects with KPIs, financial risks can be identified sooner rather than later, and actions can be taken to address them before they result in a drain on finances.
2. LITERATURE STUDY This considers the role of KPIs in the construction management area, stressing things like timeliness, quality, safety, and efficiency. Key points are that the application of KPIs may, particularly in financial statistics, cause project failure and financial mismanagement. The amount of project failure is huge, as 80% of project failure is attributable to
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Financial Planning: Allocating money and making forecasts. Budgeting: Manages project costs and maximizes available financial resources. Project funding: Secures ongoing access to financial resources to support the continued progress of the project.
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