Abstract

Today’s construction industry consists of fierce competition andlow margins, resulting in companies focusing on cost risk awareness. The aimof this thesis was to investigate how construction companies manage theirmarket risks, with a special focus on commodity risks. In addition, thethesis purpose was also to explore the composition of commodity exposureswithin a few selected construction companies. A financial index of commodityexposures was generated out of Statistiska Centralbyråns totalafaktorprisindex for multi-residence housing projects. Furthermore, afictional case was combined to test the risk management effect of thefinancial index, using Sweden’s four largest construction companies’commodity exposures. In summary, the construction companies were all aware oftheir commodity exposures although most of them did not actively manage themor know their exposures extent. Moreover, financial risk management ofcommodities is not easy or straightforward, resulting in difficulties inchoosing the right management tool. Therefore, this thesis created andillustrated how a financial index could be used as a way to stabilize theprofitability in construction projects.