Scientific journal

Название журнала на английском

In the modern world, the development of housing construction plays an important role in the regional economy and in the country as a whole. This directly relates to meeting the needs of the society in technologically high-quality and technically modern housing. Housing construction is performed within the implementation of the main priority of social and economic development to meet the need for quality housing. The construction complex of Russia is one of the main fundamental pillars for almost all areas of production that exist in our country [1]. Construction is an independent branch of the national economy, designed to put new building facilities and development projects into operation, including reconstruction, expansion, modernization, technical re-equipment and total renovation of existing industrial and non-industrial facilities.

As the purpose of the activity of any society is the production of goods to meet the needs of people, the key objective of the construction industry is to create conditions for progressive development of the entire national economy.

Currently, the market for construction services is developing rapidly. Every year, new residential complexes appear in cities that meet all needs of citizens: restricted area, underground parking, storerooms, etc.

The aim of this investigation is to assess the possible risks incurred in housing construction and prevent their occurrence in the construction industry. The objectives are to study the factors affecting the construction services market, to conduct SWOT analysis of a particular construction company, to carry out PEST analysis of the construction industry and to offer strategic measures for the development of the construction business.

There are two types of factors, which can affect the construction services market. External factors include economic, social, natural, technological and government. Internal factors include the presence of competitors, the characteristics of the personnel of construction companies, consumers and suppliers. Taken as a whole, all these factors form the market for construction services [2].

In order to assess the macro-environment of a construction company, we carried out the PEST analysis, the results of which showed that political and state aspects include such modern phenomena as parallel imports, development and implementation of the Young Family Project, which is aimed at helping young families to buy a residential property [3].

Economic factors, in turn, are a decrease in the income of the population due to inflation, as well as an increase in the interest rate on mortgages, which ultimately has already reduced the demand for housing by 10-20% compared to 2021 [4]. Socio-cultural factors influencing the market situation include the replacement of housing accommodations due to an increase in family members, as well as a change in lifestyle and consumer behavior.

Technological aspects are especially important for the construction services market. Most construction companies improve their construction technologies and raise the level of equipment used so that the quality of residential buildings could be both aesthetic and safe to live in.

To assess the internal and external environment of the construction company, SWOT analysis and PEST analysis were carried out. SWOT analysis was proposed by Professor Kenneth Andrews at a conference at Harvard in 1963. SWOT analysis is a strategic planning method for assessing internal and external factors that affect the development of a company. This analysis enables to assess the strengths and weaknesses of the company and to determine development prospects and external threats.

PEST analysis helps evaluate the company’s macro business environment. It was developed by Professor Francis Aguilar in 1967. In turn, PEST analysis is a marketing tool designed to identify the political, economic, social and technological aspects of the external environment that affect the company’s business.

The recognized methodology of SWOT analysis allowed us to study the internal and external environment, that can affect the activities of a construction company, and to consider possible risks and competitiveness of the company. The strengths of the studied construction company are the following: a wide selection of residential complexes in different locations; the construction of high-quality residential buildings due to application of the latest technologies; the ability of the company to provide choice to buyers, as several objects are being built simultaneously. The weaknesses include the marketing environment and not always successful layout design in the residential buildings. The opportunities in this company relate to the use of the latest technology and quality materials, as well as the sale of housing through government support programs. At the moment, the threats are associated with an increase in the interest rate on mortgages and a decrease in the demand for the purchase of housing in the country.

Strategic actions that can be acceptable for the development of the construction business in the future comprise the following measures: construction of residential complexes in new areas of the city, improvement of the layout designs in apartments and development of the marketing activities via new channels for promoting housing property as a construction product [4].

To evaluate the effectiveness of the company, the analysis of profitability and liquidity of the company was carried out. The liquidity of the company shows the ability of the company to cover obligations by its assets. In practice, three main liquidity ratios are usually estimated: the current ratio, the quick ration and the ratio of absolute liquidity. Moreover, to assess the effectiveness of the company as a whole, it is necessary to calculate the degree of solvency of the company. The results of the calculation are shown in table 1.

Table 1

Liquidity ratios

The figures show that the chosen construction company in the city of Novosibirsk is solvent and liquid, which indicates its high development and work efficiency.

The next analysis is the profitability of the company. In order to evaluate the effectiveness of investment in the company’s assets, we used such indicators as return on sales, return on assets and return on equity. The results for the three consequent years are given in table 2.

Table 2

Profitability indicators

The analysis allows us to conclude that the return on current assets reduced to 0.66% by 2021. This happened due to bank loans borrowed for the construction of a new residential complex. The profitability of sales showed the highest result in 2020, as there was a big increase in apartment sales that year. By 2021, the profitability of sales decreased. This was caused by the construction of a new residential complex and the sale of all apartments owned by the company. Return on equity indicator was at a good level in 2019 and 2020, but lowered in 2021. Following this, we can conclude that in 2021 the company’s capital was not used very efficiently.

In order to improve the economic position of a construction company in the market, it should increase its assets, which thereby improve its liquidity. This can help a company stay in the construction market for a long time.

Thus, the change in the construction market, to a large extent, involves correctly chosen strategies for further development of the construction companies so that the new residential areas could meet all the requirements of consumers. In the current business environment, there is a number of external and internal risks affecting the construction market. If companies assess their risks before starting construction, they can avoid problems in the future and build quality and new dwellings for their customers. The proposed methodology enables to assess the current risk factors that may affect the business. It can be applied by other construction companies operating in Russia.