Andalib, R; Hoseini, A and Gatmiri, B (2018) A stochastic model of cash flow forecasting considering delays in owners' payments. Construction Management and Economics, 36(10), pp. 545-564. ISSN 01446193
Abstract
Delays in progress payments have always been one of the most aggravating difficulties, threatening the desired profit margin and should be considered based on the owners' financial records at the bidding stage. However, previous models have often ignored the probabilistic nature of cash inflow. The conducted research endeavours to develop a new stochastic simulation-based framework for forecasting the cash flow of the construction projects considering the owners' payment history in previous projects and intertemporal correlation between successive progress payments. This process involves introducing the Budget Realization Index, with probabilistic nature, whose underlying distribution is determined based on the owners' behaviour. The model was applied to four real projects in Iran. The financing costs inflicted on the contractors stood in the range of the simulation results in the uncertainty level of 50–80%. Therefore, the proposed systematic framework would appropriately perform for forecasting contractors' financial status through the project.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | construction finance; delay; interim payments; intertemporal correlation; uncertainty |
| Index terms: | cash flow forecasting, interim payment, owner, construction finance, history, financing, construction project, forecasting, bidding, cash flow, profit |
| Subjects: | financial and cost management, production management, prediction and forecasting, bidding, economic analysis, architectural and construction history, financial management, sociology |
| Topics: | Procurement, Cost Management, Stakeholder Management, Business Strategy, Research Practice, Project Management |
| Descriptive scope: | 4 PCTA |
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