Optimizing Project Cost: An insight into contractor’s cash flow

Abstract

Maintaining a healthy financial state of the project is a challenging task due to gap between cash inflows and outflows. Contractors in Pakistan face financial stress due to bureaucratic and procedural delays resulting into a low cash inflow and high cash outflows. The reason lies in the lack of proper management tools which can assist them in easing out their cash flows. This study aims at helping the contractors to optimize their cost and eventually maximizing their profit. Various factors reported in the literature have been identified to be incorporated in model which will be validated through case studies. The resulting model will help the contractor to foresee its cash flow profile right at the start of the project. The model will also help the contractor and client to negotiate for the mobilization advance and retention money to be deducted from contractors’ payments. Therefore, it can also serve as the decision-making tool for contractor and client as well