PROJECT FINANCE STRUCTURE IN THE CONSTRUCTION SECTOR AND DEFINING THE PROBLEMS

Abstract

The need for physical infrastructure in the world is increasing day by day and states use different project delivery systems and financing methods to meet this demand. To realize such projects, which are usually quite large, with traditional methods. This research paper presents a state-of-the-art review of project finance methodology. It serves to highlight the increasing use and new application areas of project finance techniques in this area. It tries to explain the role of the participants, the main contract arrangements, to describe the main features of project finance. It also provides an opportunity to identify new trends, to determine the current state of project finance, by drawing attention to the main challenges of this technique used. Project financing is mainly based on the evaluation, financing and realization of an investment need on the basis of revenues to be obtained during the operation phase. However, due to its nature, the organizational and financing structures in the project finance model are quite complex compared to traditional systems and expose many different actors to risks that they do not experience in their core business areas.