section_path: Construction processes/Finance
section_name: Finance
paragraph_text: Finance
  
  Depending on the type of project, mortgage bankers, accountants, and cost engineers may participate in creating an overall plan for the financial management of a construction project. The presence of the mortgage banker is highly likely, even in relatively small projects since the owner's equity in the property is the most obvious source of funding for a building project. Accountants act to study the expected monetary flow over the life of the project and to monitor the payouts throughout the process. Professionals including cost engineers, estimators and quantity surveyors apply expertise to relate the work and materials involved to a proper valuation.
  
  Financial planning ensures adequate safeguards and contingency plans are in place before the project is started, and ensures that the plan is properly executed over the life of the project. Construction projects can suffer from preventable financial problems. Underbids happen when builders ask for too little money to complete the project. Cash flow problems exist when the present amount of funding cannot cover the current costs for labour and materials; such problems may arise even when the overall budget is adequate, presenting a temporary issue. Cost overruns with government projects have occurred when the contractor identified change orders or project changes that increased costs, which are not subject to competition from other firms as they have already been eliminated from consideration after the initial bid. Fraud is also an issue of growing significance within construction.
  
  Large projects can involve highly complex financial plans and often start with a conceptual cost estimate performed by a building estimator. As portions of a project are completed, they may be sold, supplanting one lender or owner for another, while the logistical requirements of having the right trades and materials available for each stage of the building construction project carry forward. Public–private partnerships (PPPs) or private finance initiatives (PFIs) may also be used to help deliver major projects. According to McKinsey in 2019, the "vast majority of large construction projects go over budget and take 20% longer than expected".