ABSTRACT
This book serves a number of users, from the student to the practitioner. Therefore the discussion will range from the theoretical to the practical. In this chapter, we will examine the topic of construction project cash flows, being the specific omni-directional flow of cash to, or from, the contractor. Of interest are the practical issues of timing and size, the purpose and origin and the practical management of payments. The discussion will then move on to the need and role of cash flow forecasting. Once again this deals with the applied issues of cash flow management and management needs at key stages such as at tendering. This is of practical interest to both clients and contractors, and prepares the case for a more theoretical approach. The need for models for cash flow is further justified with a discussion of practical cash flow forecasting techniques, in particular the use of priced project schedules, before moving into the discussion of cash flow modelling. Here, the various schools of thought for modelling cash flows are discussed in an historical context, as introduction to the Kenley and Wilson (1986) Logit cash flow model, which underpins the analyses in the book. This approach is selected because it is designed to empower analysis of net cash flows, which is crucial to understanding the role of cash management in financing construction.
