A Risk-Adjusted Capital Monitoring Algorithm for Infrastructure Project Accounts with Comparative Evaluation Against Traditional Variance Analysis Techniques

Alhaji Mohamed Seraj Jalloh (), Rukayat Akingbade () and Joy Onma Enyejo ()

International Journal of Innovative Science and Research Technology (IJISRT), 2026, vol. 11, issue 03, 1792-1807

Abstract: Infrastructure projects involve large capital expenditures, extended timelines, and exposure to numerous uncertainties including cost escalation, schedule delays, and fluctuating financial risks. Conventional financial monitoring approaches in project accounting rely heavily on deterministic variance analysis techniques such as Cost Variance (CV), Schedule Variance (SV), and Earned Value Management (EVM). While these methods provide useful retrospective indicators, they often fail to capture dynamic financial risk exposure and probabilistic cost deviations inherent in complex infrastructure programs. This study proposes a novel Risk-Adjusted Capital Monitoring Algorithm (RACMA) designed to enhance financial oversight in infrastructure project accounts through probabilistic risk modeling and adaptive capital monitoring. RACMA integrates stochastic capital flow modeling, Bayesian risk weighting, and Monte Carlo–driven cost uncertainty simulation to produce a Risk-Adjusted Capital Performance Index (RCPI) that dynamically evaluates project financial health. The algorithm incorporates machine-assisted anomaly detection using Gradient Boosted Regression Trees and probabilistic schedule-cost coupling models to identify emerging capital deviations earlier than traditional monitoring approaches. The proposed framework is evaluated using simulated infrastructure project financial datasets representing transportation, energy, and water infrastructure investments. RACMA is compared against traditional financial monitoring techniques including Earned Value Management (EVM), Standard Variance Analysis (SVA), Forecast-based Budget Control and Hybrid model. Performance evaluation metrics include prediction accuracy of cost overruns, early risk detection capability, and capital utilization efficiency. Experimental results demonstrate that RACMA improves cost overrun prediction accuracy by approximately 28–35%, detects financial risk conditions 3–5 reporting cycles earlier, and reduces monitoring error margins compared with deterministic variance analysis frameworks. Graphical analyses illustrate comparative performance trends, including RCPI trajectory plots, risk-adjusted capital deviation curves, and predictive error distributions. The findings show that integrating probabilistic financial modeling with algorithmic risk adjustment provides a more reliable decision-support mechanism for infrastructure project finance management. The proposed algorithm therefore represents a significant advancement in capital monitoring methodologies, offering project managers and financial controllers a proactive analytical tool for risk-sensitive financial oversight in large-scale infrastructure programs.

Keywords: Risk-Adjusted Capital Monitoring Algorithm (RACMA); Infrastructure Project Accounting; Variance Analysis Techniques; Capital Risk Modeling; Infrastructure Financial Analytics. (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:cvr:ijisrt:2026:03:ijisrt26mar1121

DOI: 10.38124/ijisrt/26mar1121

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