The impact of logistics and price volatility on construction project economics

This article examines the impact of logistics and price volatility on construction project economics in the Russian context. The aim of the study is to develop a theoretical framework explaining how uncertainty in materials and equipment supply chains translates into cost and schedule variations, as well as project financial and economic indicators. The methodological basis is a conceptual analysis and synthesis of interdisciplinary approaches in construction economics, supply chain management, and contract management, enabling the linking of procurement decisions, supply parameters, and project cost structure into a single cause-and-effect diagram. As a result, a model of the interrelated impact of price volatility and logistics constraints is proposed. It identifies a direct channel for changes in procurement costs and an indirect channel through schedule disruptions, leading to increased overhead costs, financing costs, and the risk of capital loss. It is shown that the combined effect of these factors is non-additive: logistical disruptions increase a project’s sensitivity to price fluctuations by reducing the scope for supplier choice, increasing the role of urgent purchases, and increasing the likelihood of forced substitutions. A typology of management and contractual mechanisms that reduce the transmission of shocks to project economic outcomes is formulated, and theoretical propositions are proposed that can serve as a basis for further empirical testing and for developing procurement planning and reservation practices in construction projects in Russia.