Financial Management of the Construction Projects: A Proposed Cash Flow Analysis
            Model at Project Portfolio Level

Non-state corporate structures, which are the most widespread subjects of Russian business, do not have direct state influence and significant support, and are the most severely affected by the global pandemic of 2019–2020, are increasingly facing a situation of their own insolvency.50 Экономические системы. 2020. № 2 Economic Systems. 2020. No. 2 In these conditions, financial managers of non-state corporate structures try to plan the distribution of their funds more clearly and devote significant influence to their analysis. The author defines the concept of cash flow analysis of non-state corporate structures corresponding to its modern content. The article presents the author's systematization of methods for analyzing cash flows used by non-governmental corporate structures on the basis of the following features: by time interval, by the sources of information used, by the content of the main methodological techniques, by the traditional direction of potential use. The time interval was used for retrospective, operational and forecast analysis of cash flows of non-state corporate structures. According to the sources of information used in the analysis of cash flows, it was detailed into external, internal and mixed. According to the content of methodological techniques, analytical procedures used in the analysis of cash flows in non-state corporate structures are a direct method of analyzing cash flows, an indirect method of analyzing cash flows and coefficient methods of analyzing cash flows. Based on the traditional nature of the potential use areas, we have identified traditional and non-traditional (relatively new) areas of use of cash flow analysis of non-state corporate structures that have become traditional in recent years. The article provides a brief description of direct, indirect and coefficient methods for analyzing cash flows of non-state corporate structures and describes the directions of their use. The main directions of their application are considered: determining the main types of proportions of cash receipts and outflows and distribution of cash flows by type of activity; calculating the net cash flow based on net profit and its adjustments; calculating the coefficients of sufficiency and efficiency of cash flows. The greatest attention is paid to the directions of non-traditional use of methods of cash flow analysis that solve certain tasks of financial management: assessing the feasibility of local financial solutions, determining the synchronicity and uniformity of inflows and outflows, eliminating short-and medium-term cash gaps, determining the level of tax costs, determining the ability of the organization to repay various types of obligations

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Cash flow modeling for construction projects

Engineering Construction & Architectural Management ◽

10.1108/ecam-08-2012-0082 ◽

2014 ◽

Vol 21 (2) ◽

pp. 170-189 ◽

Cited By ~ 11

Author(s):

Tarek Zayed ◽

Yaqiong Liu

Keyword(s):

Cash Flow ◽

Financial Management ◽

Construction Projects ◽

Mean Value ◽

Major Step ◽

Flow Management ◽

Content Type ◽

Cash Flow Management ◽

Cash Flow Forecasting ◽

The Impact

Purpose – Construction projects are well known for their complexity and ambiguity. These projects carry out higher risk than traditional ones because they entail high capital outlays and intricate site conditions. Poor financial management of these projects may lead to bankruptcy; therefore, effective cash flow management is essential. Although the peculiar characteristics of construction projects, the accuracy of cash flow forecasting has been a long lasting problem. The paper aims to discuss these issues. Design/methodology/approach – Many unforeseen factors affect the cash flow forecasting of construction projects. Therefore, the objective of the presented research in this paper is to examine the impact of these factors on contractor's cash flow. A model has been established by integrating analytic hierarchy process and simulation to examine the impact of various factors on cash flow. Data on the selected factors have been collected through questionnaires from various agencies in North America and China. Findings – Results show that the most significant factors are: change of progress payment, payment duration, financial position of the contractor, project delays, and poor planning. It also shows that the effect of cash inflow factors varied approximately from 9.7 to 16.3 percent with a mean value of 12.4 percent. Research limitations/implications – The implementation of the developed models are limited to few case study projects in testing the models. However, the developed models and framework are sound for future improvement. They are considered as a major step toward a broader cash flow planning. Practical implications – The developed methodology and models play essential roles in decision-making process. Originality/value – The developed model is expected to help contractors realistically forecast project cash flow under uncertainty. This may lead to more dependable and professional cash flow management, which might substantially reduce failures in construction business.

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A Study of the Cash Flow Forecasting Impact on the Owners Financial Management of Construction Projects in the State of Kuwait

Asian Business Research ◽

10.20849/abr.v3i1.351 ◽

2018 ◽

Vol 3 (1) ◽

pp. 69

Author(s):

Moustafa Kotb ◽

Mohamed Abdel Razik Ibrahim ◽

Yousef Saleh Al-Olayan

Keyword(s):

Cash Flow ◽

Financial Management ◽

Construction Projects ◽

Critical Path ◽

Cash Flows ◽

The State ◽

Economic Feasibility ◽

Flow Plan ◽

S Curve ◽

The State Of Kuwait

Cash flow is considered to be the main acceleration’s factor of any construction contract, which has a large and direct impact on projects completion dates as well as the project contractual duration. This is very evident when examining how the owners benefit from their projects in achieving or forfeiting the desired economic feasibility determined in the feasibility study of any project.It is noted that the cash flow plan is issued through a Critical Path Method (CPM) for a project which entails only an estimate of the monetary value of the construction work to be carried out on site and on a rough and approximate basis using the cash flow’s curve (S-CURVE), which is usually gives a different value from the actual work performed onsite.The impact of this problem on financial management for any project is as follows:In the case of underestimation, if the available estimates are less than the required cash flow, it is considered as a major cause for delay in project completion as well as the inability of the owner to achieve the economic feasibility Internal Rate of Return (IRR) required for the project. Also, this leads to monitory error due to the financial compensations due to the contractor as a result of the damage caused by time extensions due to the holdings of the cash entitlements.In the case of overestimation of the value of the required cash flow with a high margin of error, this leads to the monetary waste of amounts that could have been invested in other ventures, projects or opportunities.This paper provides a summary of the importance of determining the appropriate amount of cash flows required to be provided by the owner’s financial management, which leads to achieving the appropriate projects financial management gains and thus reducing financial losses or disputes in construction projects in the State of Kuwait.

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Cash Flow Optimization for Renewable Energy Construction Projects with a New Approach to Critical Chain Scheduling

Energies ◽

10.3390/en14185795 ◽

2021 ◽

Vol 14 (18) ◽

pp. 5795

Author(s):

Janusz Kulejewski ◽

Nabi Ibadov ◽

Jerzy Rosłon ◽

Jacek Zawistowski

Keyword(s):

Renewable Energy ◽

Cash Flow ◽

Construction Projects ◽

Flow Analysis ◽

Optimization Techniques ◽

Management Tool ◽

New Approach ◽

Completion Date ◽

The Stability ◽

Critical Chain

This study concerns the use of the critical chain method to schedule the construction of renewable energy facilities. The critical chain method is recognized as a useful project management tool, transforming a stochastic problem of uncertainty in activity durations into a deterministic one. However, this method has some shortcomings. There are no clear principles of grouping non-critical activities into feeding chains. Another ambiguity is sizing the feeding buffers with regard to the topology of the network model and the resulting dependencies between activities, located in different chains. As a result, it is often necessary to arbitrarily adjust the calculated sizes of feeding buffers before inserting them into the schedule. The authors present the new approach to sizing the time buffers in the schedule, enabling a quick assessment of the quality of a given solution variant and finding a solution that best meets the established criteria, conditions, and constraints. The essence of the presented approach is the two-step sizing of time buffers with the use of deterministic optimization and stochastic optimization techniques. Taking into account construction management needs, the optimization criteria are based on the construction project cash flow analysis. The effectiveness of the presented approach is illustrated by an example of developing a wind power plant construction schedule. According to the results, the presented approach ensures the protection of the scheduled completion date of the construction and the stability of the schedule.

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LATE AND NON-PAYMENTS ISSUES IN THE MALAYSIAN CONSTRUCTION INDUSTRY: PERSPECTIVE OF BUILDING MATERIAL SUPPLIERS

Malaysian Journal of Sustainable Environment ◽

10.24191/myse.v6i1.8674 ◽

2020 ◽

Vol 6 (1) ◽

pp. 39

Author(s):

Mohd Fisal Ishak ◽

Kartina Alauddin ◽

Mohd Shahrol Hafiz Ibrahim

Keyword(s):

Construction Industry ◽

Cash Flow ◽

Financial Management ◽

Building Material ◽

Building Materials ◽

Management Team ◽

Flow Management ◽

Cash Flow Management ◽

Main Effect ◽

Klang Valley

Payment in the Malaysian construction industry has generally been an issue of concern. Late and non-payment problem is endemic in construction and needs to be addressed. The aim of this study is to investigate the issues related to late and non-payment based on the building materials suppliers’ perspective. Questionnaires were distributed to suppliers of building materials in the Klang Valley. Findings from the study shows the main cause of late and non-payment is the paymaster’s poor financial management while the main effect of late and non-payment is problem with the cash flow. The most recommended possible solution to cope with the issue is for the paymaster to conduct training on financial and cash flow management to the management team in the company.

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Using Discounted Cash Flow Analysis in an International Setting: A Survey of Issues in Modeling the Cost of Capital

CFA Digest ◽

10.2469/dig.v29.n3.532 ◽

1999 ◽

Vol 29 (3) ◽

pp. 75-77

Author(s):

Joseph Vu

Keyword(s):

Cash Flow ◽

Cost Of Capital ◽

Flow Analysis ◽

Discounted Cash Flow ◽

International Setting ◽

The Cost

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JEFFl/2-a cash flow analysis program

10.2737/ne-gtr-234 ◽

1997 ◽

Author(s):

Bruce G. Hansen ◽

A. Jeff Palmer

Keyword(s):

Cash Flow ◽

Flow Analysis ◽

Analysis Program

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TINJAUAN STUDI KELAYAKAN USAHA BADAN USAHA MILIK DESA (NAGARI) KAMANG HILIA SEJAHTERA KENAGARIAN KAMANG HILIA, KECAMATAN KAMANG MAGEK, KABUPATEN AGAM, PROVINSI SUMATERA BARAT

UNES Journal of Social And Economics Research ◽

10.31933/ujser.3.2.160-169.2018 ◽

2018 ◽

Vol 3 (2) ◽

pp. 160

Author(s):

Halkadri Fitra ◽

Salma Taqwa ◽

Charoline Cheisviyanny ◽

Abel Tasman ◽

Nurzi Sebrina

Keyword(s):

Cash Flow ◽

Net Present Value ◽

Average Rate ◽

Flow Analysis ◽

Payback Period ◽

Rate Of Return ◽

Internal Rate Of Return ◽

Present Value ◽

Internal Rate

Penelitian ini bertujuan untuk melihat kelayakan aspek keuangan usaha grosir sembako Badan Usaha Milik Desa (Nagari) Kamang Hilia Sejahtera di Kenagarian Kamang Hilia Kecamatan Kamang Magek Kabupaten Agam Provinsi Sumatera Barat yang dilakukan pada tahun 2018. Penelitian bersifat deskriptif kuantitatif dengan menggunakan metode cash flow analysis, payback period, net present value, profitability index, internal rate of return, dan average rate of return. Hasil penelitian menunjukkan bahwa nilai net cash flow Badan Usaha Milik Desa (Nagari) Kamang Hilia Sejahtera adalah positif yaitu Rp.21.774.000, nilai payback period adalah 1,15 tahun, nilai net present value positif sebesar Rp.10.680.034,47, nilai profitability index adalah positif 1,37, sedangkan nilai internal rate of return adalah 46,7% dan nilai average rate of return adalah 57,23%. Berdasarkan standar penilaian maka semua metode yang digunakan memberikan kesimpulan bahwa usaha grosir sembako milik Badan Usaha Milik Desa (Nagari) Kamang Hilia Sejahtera dalam kategori layak untuk dilaksanakan.

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Harnessing Machine Learning for Classifying Economic Damage Trends in Transportation Infrastructure Projects

Sustainability ◽

10.3390/su13116376 ◽

2021 ◽

Vol 13 (11) ◽

pp. 6376

Author(s):

Junseo Bae ◽

Sang-Guk Yum ◽

Ji-Myong Kim

Keyword(s):

Machine Learning ◽

Financial Management ◽

Construction Projects ◽

Transportation Infrastructure ◽

Classification Model ◽

Insurance Companies ◽

Economic Damage ◽

Infrastructure Projects ◽

Machine Learning Classification ◽

Financial Losses

Given the highly visible nature, transportation infrastructure construction projects are often exposed to numerous unexpected events, compared to other types of construction projects. Despite the importance of predicting financial losses caused by risk, it is still difficult to determine which risk factors are generally critical and when these risks tend to occur, without benchmarkable references. Most of existing methods are prediction-focused, project type-specific, while ignoring the timing aspect of risk. This study filled these knowledge gaps by developing a neural network-driven machine-learning classification model that can categorize causes of financial losses depending on insurance claim payout proportions and risk occurrence timing, drawing on 625 transportation infrastructure construction projects including bridges, roads, and tunnels. The developed network model showed acceptable classification accuracy of 74.1%, 69.4%, and 71.8% in training, cross-validation, and test sets, respectively. This study is the first of its kind by providing benchmarkable classification references of economic damage trends in transportation infrastructure projects. The proposed holistic approach will help construction practitioners consider the uncertainty of project management and the potential impact of natural hazards proactively, with the risk occurrence timing trends. This study will also assist insurance companies with developing sustainable financial management plans for transportation infrastructure projects.

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