Forecasting Economic Difficulties in Road Maintenance Contracts

In organising tendering competitions for regional maintenance contracts, it is necessary to know whether a bidding company is financially able to maintain its operations in the long-term. The purpose of this study is to examine whether financial statement information and the related financial indicators are sufficient in the tender notification phase for regional maintenance contracts. The study seeks to test, using financial statement information related to a bankrupt maintenance contractor, whether difficulties can be detected early enough. In 2010, the Finnish Transport Agency carried out an economic efficiency study of regional contracts. The purpose of the study was to establish financial requirements for the tender response phase. The study suggested that the Laitinen Z-score should be used. The study came to the conclusion that absolute requirements should not be used. In this case, the Laitinen Z-score was not able to predict bankruptcy. However, if key figures are studied separately, the company can be detected to have weaknesses in terms of some figures. Financial statement information and key figures can partly be used to predict companies’ financial difficulties and possible bankruptcies. Key figures cannot be trusted completely. Light analyses and continuous monitoring indicate the financial status of companies' quite reliable level.

Language

  • English

Media Info

  • Media Type: Digital/other
  • Features: Figures; References; Tables;
  • Pagination: 16p
  • Monograph Title: Proceedings of the 25th World Road Congress - Seoul 2015: Roads and Mobility - Creating New Value from Transport

Subject/Index Terms

Filing Info

  • Accession Number: 01670600
  • Record Type: Publication
  • ISBN: 9782840604235
  • Report/Paper Numbers: 0209
  • Files: TRIS
  • Created Date: May 20 2018 12:49AM