Odeyinka, H A; Kaka, A and Marledge, R (2003) An evaluation of construction cash flow management approaches in contracting oraganizations. In: Greenwood, D J (ed.) Proceedings of 19th Annual ARCOM Conference, 3-5 September 2003, Brighton, UK.
Abstract
Financial planning is central to the survival of any construction company. This is essential as lack of funds had been identified as the most common cause of business failure, and can lead to the failure of profitable and growing firms as well as those declining. On the other hand, a permanent surplus of funds, while less damaging is in itself an uneconomic state of affairs. As such, there is a need for adequate timing of fund availability in construction and deployment of excess fund to more productive use. This paper examines the construction cash flow management approaches in the UK contracting organizations through a questionnaire survey. Essentially, the survey examines the strategies adopted by construction firms in resolving deficit cash flow. It also investigates the extent of usage of some identified cash flow forecasting methods. By ranking the mean response data analysis was carried out. This enabled the major strategies employed for resolving deficit cash flow to be determined. It also aided the determination of major cash flow forecasting methods utilized by the industry. Further analysis was carried out using one-way analysis of variance (ANOVA). This enabled preferences of cash flow management approaches between different sizes of firms to be determined. Results showed the major approaches employed in resolving deficit cash flow and approaches preferred by different sizes of construction firms. Results further showed extent of usage of various cash flow forecasting methods. The findings are significant, as firm size seems to have direct implications on the approaches contracting firms adopt in cash flow management. The findings also have implications for further research in this area particularly for SMEs
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | cash deficit; cash flow forecasting; contractor; UK |
| Index terms: | cash flow forecasting, survival, contracting organization, preference, questionnaire, construction firm, survey, construction company, strategy, data analysis, cash flow management, cash flow, business failure, financial planning, variance |
| Subjects: | measurement and scaling, management, financial management, decision-making and reasoning, environmental science, data analysis and analytics, financial and cost management, economic analysis, practitioner, data collection methods, organization |
| Topics: | Roles and Professions, Sustainability, Cost Management, Business Strategy, Research Practice |
| Descriptive scope: | 4 PCEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here