Innovative Price Indexing for Managing Road and Bridge Projects: Mitigating Cost Overruns

Outlays on infrastructure projects account for a significant portion of the national economy's expenditures. The ongoing tender procedures and rising prices of services and materials in the construction industry mean that the budget for road infrastructure development is subject to dynamic changes. The result is an underestimation of expenses and slowing down or stopping road works. This entails negative consequences for both the contractor and the investor. The paper aimed to present an experimental method based on measures of the dynamics of road and bridge works prices, which will reduce the risk of exceeding construction investment costs. An example of a national road investment was selected for the study, based on which methods of estimating the value of valorization of the price of a road investment chosen based on the price indices of construction works of road and bridge structures over the past five years were presented. Based on the application of the innovative adjustment index, the permissible limits of valorization were indicated, which form the basis for the renegotiation of contract prices within the framework of the studied investment between the investor and the construction contractor. The results of the study could be used by the public sector to assess the effectiveness of procurement in the area of infrastructural projects and to improve tender procedures.