This document summarizes a study analyzing the contractual implications of cash flow on owners and contractors for villa construction projects in Oman. Data from 25 villa projects was used to calculate the minimum fund contractors require to continue work in cases of delayed interim payments. The analysis found that for a maximum 4-week payment delay, contractors require on average 8.5% of the contract value in minimum funds. Delayed payments can result in work stoppages, delayed project completion, penalties for the contractor, and even project incompletion. Ensuring adequate minimum funds mitigates these risks for contractors while also helping owners receive projects on schedule.
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
Contractor’s ability to mitigate damages can be limited if coupled with uncertainty of the duration of the delay. HOOH is recoverable in certain prolonged delay situations and has been granted by courts and amicable settlements for more than half a century. The Contractor may recover the return that he would have achieved on other work had his resources not been detained on the Works due to the delay. The presentation highlights the different formulae used in the calculations and conditions precedent to do so.
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
Contractor’s ability to mitigate damages can be limited if coupled with uncertainty of the duration of the delay. HOOH is recoverable in certain prolonged delay situations and has been granted by courts and amicable settlements for more than half a century. The Contractor may recover the return that he would have achieved on other work had his resources not been detained on the Works due to the delay. The presentation highlights the different formulae used in the calculations and conditions precedent to do so.
Assessment of Risks in International EPC Projects Reference Current Global Ec...HIMADRI BANERJI
Assessment of Risks in the present global economic environment for projects and especially projects that deal with EPC contracting for large scale infrastructure. A review of some of the major projects that have changed the rues of the game for Project Risk Assessment, management and mitigation forms a significant part of the prentation
Assessment of Risks in International EPC Projects Reference Current Global Ec...HIMADRI BANERJI
Assessment of Risks in the present global economic environment for projects and especially projects that deal with EPC contracting for large scale infrastructure. A review of some of the major projects that have changed the rues of the game for Project Risk Assessment, management and mitigation forms a significant part of the prentation
Investigation and computational analysis of divergent orifice in fuel injecto...eSAT Publishing House
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology.
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IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology.
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
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IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
New optimization scheme for cooperative spectrum sensing taking different snr...eSAT Publishing House
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology.
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
Solar system as a radio telescope by the formation of virtual lenses above an...eSAT Publishing House
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology.
Semantic approach utilizing data mining and case based reasoning for it suppo...eSAT Publishing House
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
A software framework for dynamic modeling of dc motors at robot jointseSAT Publishing House
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
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IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
A case study of Delay Analysis of construction project: Al Kut Olympic Stadiu...Gaurav Verma
These slides present a case study of Delay Analysis in Construction of "AL KUT OLYMPIC STADIUM". After going through these slides you will gotta know the following things:
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A Multi-Objective Fuzzy Linear Programming Model for Cash Flow ManagementIJERA Editor
Although significant research work has been conducted on cash flow forecast, planning, and management, the objective is constantly the maximization of profit/final cash balance, or minimization of total project cost. This paper presents a multi-objective fuzzy linear programming model (FLP) for resolving the optimization problem of three conflicting objectives: final cash balance, cost of money, and initial cash balance. The proposed model depends on Jiang et al. (2011) Model. In the new formulation, both the advanced payment and delay of owner's progress payment one period were considered. Literature concerned with cash flow studies and models for construction projects was reviewed. Fuzzy linear programming applications in literature was presented and it's concept was then described. Jiang et al. (2011) Model is presented. The proposed model development was then presented. The proposed model was validated using an example project. An optimization of each individual objective was performed with a linear programming (LP) software (Lindo) that gave the upper and lower bounds for the multi-objective analysis. Fuzzy linear programming was then applied to optimize the solution. Four cases are considered: considering advanced payment and delay of owner's progress payment one period simultaneously, then separately, and neglecting advanced payment and delay of owner's progress payment. Penalty of delayed payment have been also considered. Analysis of the results revealed that the model is an effective decision making tool to be used by industry practitioners with reasonable accuracy.
Analysis of factors contributing delays and claims in construction projectseSAT Journals
Abstract
Construction activities are the most competitive and it involves higher risk with minimum profitability due to competition.
Construction of any infrastructural work involves complex management skills related to manpower, materials, plant, machineries,
new technologies etc. It also involves many agencies interdependent on each other like the planners, structural and functional
designers including various types of specialized engineers and it also includes support of financial institutions, insurers, contractors
and specialized contractors. As there are prevailing labour bye laws it needs special care of their well beings. In such kind of complex
and intense framework some disputes is quite natural between the agencies involved in such activities which further results in claims
management as the unsettled dispute finally leads to financial claims. Higher incidences of disputes are generally reported from the
construction contract. Even if there is an appropriate understanding of construction contract clauses from the agencies in the
agreement yet claims seems to be a major crisis in the construction sector. The research reported in this paper aims in identifying the
major factors responsible of project delay that may give rise to claims for delay damages. The in this paper research mainly highlights
on finding the major components of claims with perspective of contractor for delay damages.
Keywords: Claims, delay, damages, construction industry, disputes
Analysis of factors contributing delays and claims in construction projectseSAT Journals
Abstract
Construction activities are the most competitive and it involves higher risk with minimum profitability due to competition.
Construction of any infrastructural work involves complex management skills related to manpower, materials, plant, machineries,
new technologies etc. It also involves many agencies interdependent on each other like the planners, structural and functional
designers including various types of specialized engineers and it also includes support of financial institutions, insurers, contractors
and specialized contractors. As there are prevailing labour bye laws it needs special care of their well beings. In such kind of complex
and intense framework some disputes is quite natural between the agencies involved in such activities which further results in claims
management as the unsettled dispute finally leads to financial claims. Higher incidences of disputes are generally reported from the
construction contract. Even if there is an appropriate understanding of construction contract clauses from the agencies in the
agreement yet claims seems to be a major crisis in the construction sector. The research reported in this paper aims in identifying the
major factors responsible of project delay that may give rise to claims for delay damages. The in this paper research mainly highlights
on finding the major components of claims with perspective of contractor for delay damages.
Keywords: Claims, delay, damages, construction industry, disputes.
Procurement principle towards effective management of construction projectseSAT Publishing House
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology.
Contractual Steps for Smooth Delivery of Infrastructure ProjectsAM Publications
Governments and public entities spend huge public money for purchase of goods, services and construction of works. Therefore, it is vital that procurement system shall not only be efficient but also be transparent, fair & just without compromising the quality of output. Various stakeholders have different interests in influencing the decision-making. This paper elaborates various possible alternative strategies available for procurement. Depending upon environment and various challenges, one can choose the best mode, method & process of procurement. The procurement could be for goods, work, services, consultancy etc. Consultancy contracts are different game altogether, because they have more emphasis on intellectual inputs rather than mere physical outcome. The scope of this paper is limited to works procurement.
The International Journal of Engineering & Science is aimed at providing a platform for researchers, engineers, scientists, or educators to publish their original research results, to exchange new ideas, to disseminate information in innovative designs, engineering experiences and technological skills. It is also the Journal's objective to promote engineering and technology education. All papers submitted to the Journal will be blind peer-reviewed. Only original articles will be published.
The papers for publication in The International Journal of Engineering& Science are selected through rigorous peer reviews to ensure originality, timeliness, relevance, and readability.
Sachpazis:Terzaghi Bearing Capacity Estimation in simple terms with Calculati...Dr.Costas Sachpazis
Terzaghi's soil bearing capacity theory, developed by Karl Terzaghi, is a fundamental principle in geotechnical engineering used to determine the bearing capacity of shallow foundations. This theory provides a method to calculate the ultimate bearing capacity of soil, which is the maximum load per unit area that the soil can support without undergoing shear failure. The Calculation HTML Code included.
HEAP SORT ILLUSTRATED WITH HEAPIFY, BUILD HEAP FOR DYNAMIC ARRAYS.
Heap sort is a comparison-based sorting technique based on Binary Heap data structure. It is similar to the selection sort where we first find the minimum element and place the minimum element at the beginning. Repeat the same process for the remaining elements.
NUMERICAL SIMULATIONS OF HEAT AND MASS TRANSFER IN CONDENSING HEAT EXCHANGERS...ssuser7dcef0
Power plants release a large amount of water vapor into the
atmosphere through the stack. The flue gas can be a potential
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moisture, it could reduce its total cooling water intake
requirement. One of the most practical way to recover water
from flue gas is to use a condensing heat exchanger. The power
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as sensible heat due to lowering the flue gas exit temperature.
Additionally, harmful acids released from the stack can be
reduced in a condensing heat exchanger by acid condensation. reduced in a condensing heat exchanger by acid condensation.
Condensation of vapors in flue gas is a complicated
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various acids simultaneously occur in the presence of noncondensable
gases such as nitrogen and oxygen. Design of a
condenser depends on the knowledge and understanding of the
heat and mass transfer processes. A computer program for
numerical simulations of water (H2O) and sulfuric acid (H2SO4)
condensation in a flue gas condensing heat exchanger was
developed using MATLAB. Governing equations based on
mass and energy balances for the system were derived to
predict variables such as flue gas exit temperature, cooling
water outlet temperature, mole fraction and condensation rates
of water and sulfuric acid vapors. The equations were solved
using an iterative solution technique with calculations of heat
and mass transfer coefficients and physical properties.
Overview of the fundamental roles in Hydropower generation and the components involved in wider Electrical Engineering.
This paper presents the design and construction of hydroelectric dams from the hydrologist’s survey of the valley before construction, all aspects and involved disciplines, fluid dynamics, structural engineering, generation and mains frequency regulation to the very transmission of power through the network in the United Kingdom.
Author: Robbie Edward Sayers
Collaborators and co editors: Charlie Sims and Connor Healey.
(C) 2024 Robbie E. Sayers
About
Indigenized remote control interface card suitable for MAFI system CCR equipment. Compatible for IDM8000 CCR. Backplane mounted serial and TCP/Ethernet communication module for CCR remote access. IDM 8000 CCR remote control on serial and TCP protocol.
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Indigenized remote control interface card suitable for MAFI system CCR equipment. Compatible for IDM8000 CCR. Backplane mounted serial and TCP/Ethernet communication module for CCR remote access. IDM 8000 CCR remote control on serial and TCP protocol.
Key Features
Indigenized remote control interface card suitable for MAFI system CCR equipment. Compatible for IDM8000 CCR. Backplane mounted serial and TCP/Ethernet communication module for CCR remote access. IDM 8000 CCR remote control on serial and TCP protocol.
• Remote control: Parallel or serial interface
• Compatible with MAFI CCR system
• Copatiable with IDM8000 CCR
• Compatible with Backplane mount serial communication.
• Compatible with commercial and Defence aviation CCR system.
• Remote control system for accessing CCR and allied system over serial or TCP.
• Indigenized local Support/presence in India.
Application
• Remote control: Parallel or serial interface.
• Compatible with MAFI CCR system.
• Compatible with IDM8000 CCR.
• Compatible with Backplane mount serial communication.
• Compatible with commercial and Defence aviation CCR system.
• Remote control system for accessing CCR and allied system over serial or TCP.
• Indigenized local Support/presence in India.
• Easy in configuration using DIP switches.
CW RADAR, FMCW RADAR, FMCW ALTIMETER, AND THEIR PARAMETERSveerababupersonal22
It consists of cw radar and fmcw radar ,range measurement,if amplifier and fmcw altimeterThe CW radar operates using continuous wave transmission, while the FMCW radar employs frequency-modulated continuous wave technology. Range measurement is a crucial aspect of radar systems, providing information about the distance to a target. The IF amplifier plays a key role in signal processing, amplifying intermediate frequency signals for further analysis. The FMCW altimeter utilizes frequency-modulated continuous wave technology to accurately measure altitude above a reference point.
CW RADAR, FMCW RADAR, FMCW ALTIMETER, AND THEIR PARAMETERS
Contractual implications of cash flow on owner and contractor in villa construction projects
1. IJRET: International Journal of Research in Engineering and Technology eISSN: 2319-1163 | pISSN: 2321-7308
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Volume: 03 Issue: 04 | Apr-2014, Available @ http://www.ijret.org 442
CONTRACTUAL IMPLICATIONS OF CASH FLOW ON OWNER AND
CONTRACTOR IN VILLA CONSTRUCTION PROJECTS
Mohammed Al Mohsin1
, Ali Alnuaimi2
, Sumayia Al Tobi3
1
Assistant Professor, Civil and Architectural Engineering Department, College of Engineering- University of Buraimi-
Sultanate of Oman
2
Associated Professor, Civil and Architectural Engineering Department, College of Engineering- Sultan Qaboos
University, Sultanate of Oman
3
Quantity surveyor, Ministry of Regional Municipalities and Water Resources- General directorate of technical affairs-
Department of quantities and project contracts – Sultanate of Oman
Abstract
Cash flow forecasting is one of the most essential tools toward assessing the distribution of expenditure and revenues of construction
projects with respect to the time of the project. The work presented in this paper aims to find out the minimum fund required for cash
outflow in case of delay in payments and to identify contractual implications and consequences due to failure of meeting planned cash
flow on both the owner and the contractor. Data from record files of 25 villas, in Muscat, Oman, with different sizes was analysed to
identify the minimum fund required with the contractor to maintain the progress of work in-case of delay of interim payments. The
analysis also included identification of consequences of delay of interim payments. It was found that the minimum fund required is 8.5
per cent of the contract value for maximum interim payment delay of four weeks. The value of required minimum fund increases as
the period of delay increases. In most cases the percentage of the required minimum fund increases with the increase of the contract
value. Work stoppage, delay in completion, penalties and incompletion of projects are major consequences of delay on interim
payments.
Keywords: Cash flow, Villa construction contract, Oman
----------------------------------------------------------------------***------------------------------------------------------------------------
1. INTRODUCTION
Execution of construction projects can make substantial
demands on a contractor‟s cash. Initially, the contractor faces
mobilization of workers and equipment, and setting up costs.
The contractor‟s expense on a project typically exceeds its
monthly progress payment income over an appreciable part of
the construction period. The cash deficit on the project must be
made up from the contractor‟s working capital, or money must
be borrowed to provide the necessary operating funds. „„Cash
flow‟‟ refers to a contractor‟s income and outlay of cash. The
net cash flow is the difference between disbursements and
income at any point of a time. A negative net cash flow means
disbursements are exceeding income which is a usual situation
on even a highly profitable project during the greater part of its
duration. A determination of the future rates of cash
disbursements and cash income, together with their combined
effect on the project cash balance, is called a cash flow forecast.
It is the intent of the contractor to accrue income faster than it
accrues costs. At the end of the project, this difference
represents the contractor‟s profit. The problem is that the cost
of the work put into a project is not directly related to the
resulting income. Additionally, the time delays between the
accrued costs and the cash disbursement are not the same as the
time delays between the accrued income and the cash receipts.
To forecast the amount of money the contractor must invest in
the project, it is necessary to estimate the amount and the
timing of the cash disbursements and the cash receipts [1]. The
importance of modelling and optimizing cash outflows versus
inflows can hardly be overstated. Combining these disparate
and shifted phenomena gives an uneven „saw-tooth‟ pattern that
typically will result in shortfalls [2]. Project cash flow
projections relate the schedule of the values to the construction
schedule, projecting the progress payments through the duration
of the project. The cash flow projection approximates the
progress payments for each payment period during the
construction contract. This projection is used by the owner to
make financial arrangements, which makes funds available for
the payments and optimizes investment opportunities. The
contractor uses the cash flow projection for anticipating revenue
for future periods. Projection of cash flow is directly related to
the construction schedule which is a cost estimate of planned
activities and achievements at the site. Many factors influence
the actual amount of interim payments which may produce
variances from the projection; i.e. late or early delivery of
materials; late or early completion of work activities; revisions
in sequencing of work activities; and the disproportionate
completion of work activities as planned. An approximate range
can be established for the cash flow curve, using early-start
early-finish and late-start late-finish dates defining the limits of
2. IJRET: International Journal of Research in Engineering and Technology eISSN: 2319-1163 | pISSN: 2321-7308
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Volume: 03 Issue: 04 | Apr-2014, Available @ http://www.ijret.org 443
the range. Some contractors prefer to present a range to the
owner, as the cash flow projection is approximates. Other cash
flow projections use a single curve, with disclaimer that
amounts are approximate. Updating the cash flow projection is
necessary as the project progresses to provide current and more
accurate projections. Because the cash flow relates to the
amounts that will be requested for each progress payment, some
factors differ from those relating to the construction schedule.
The actual payments may not be equally distributed in the work
activity period [3]. Odeyinka and Kaka [4] used 6-point Likert-
type scale field survey on UK construction contractors to assess
their level of satisfaction with identified payment terms
influencing construction cash flow. Results showed that while
contractors were satisfied with most of the contractual factors
investigated under both procurement systems, they were
dissatisfied with two of the factors, namely; time lag between
entitlement to receive and actually receiving cash payment and
percentage of contract sum retained. Park et al [5] developed a
project-level cash flow forecasting model in construction stage
based on the planned earned value and the cost from a general
contractors view on a jobsite. Odeyinka et al [6] identified 11
significant financial risk factors out of 26 risk variables studied
to assess the impact of variation between the forecast and actual
construction cash flow. They applied a structured questionnaire
administered to UK contracting organizations and used mean
response analysis and uni-variant analysis of variance
(ANOVA) based on extent of occurrence. The factors were
grouped under three generic factors: changes in the design or
specification, project complexity and natural inhibition.
Senouci and El-Rayes [7] presented a multi-objective
optimization model that is capable of generating and evaluating
optimal/near-optimal construction resource utilization and
scheduling plans. The aim was to minimize the time and
maximize the profit of construction projects. Three modules
were developed as part of the model: (1) a scheduling module
that develops practical schedules for construction projects; (2) a
profit module that computes the project profit; and (3) a multi-
objective module that searches for and identifies optimal/near
optimal trade-offs between project time and profit. The model
was tested on a large scale project and found to optimize trade-
offs between construction time and profit. Al-Ali et al [8] built
a financial model that helps decision makers to select a path
required to plan cash flow based on a multivariate approach
from the expected cash inflow, priority, likelihood, and time of
construction. The model builds a chain of possible outcomes
and incorporates cash inflow from different projects when a
project is temporarily put on hold. Abdel Halim et al [9] studied
factors that lead to financial failure of contracting firms in
Malaysia. The found that problems related to cash flow and
cash flow management partially cause failure of contracting
firms. They developed a model that help contractors to project
level cash flow at tender stage. The model addresses the
possible time gaps between planned and actual payments. Liu
and Wang [10] investigated cash flow for profit optimization
and handles scheduling problems in multi-project environment.
They proposed a model that can identify the amount and timing
of individual inflow or outflow at the end of each period. The
contractors can observe the cash flow at any specific time
according to project progress. They tested their model on a
hypothetical example involving three projects to illustrate
capability of the proposed model with various constraints,
including credit limit (CL) and due dates, for scenario analysis.
The results showed that setting CLs ensures smooth financial
procedure by properly shifting activities, and assigning due
dates for projects, and helps planners to avoid project duration
extension while maximizing overall project profit. Memon et al
[11] focused on identification of significant causes affecting
large projects construction cost in MARA district in Malaysia
based on a field survey via a questionnaire. They concluded that
cash flow and financial difficulties faced by contractors,
contractor's poor site management and supervision, inadequate
contractor experience, shortage of site workers, incorrect
planning and scheduling by contractors are most severe factors
while changes in scope of project and frequent design changes
are least affecting factors on construction cost.
2. PROBLEM STATEMENT
Failure to meet cash flow requirements or minimum fund
needed for a construction project would cause many problems
or failure of contracting companies which can be reflected on
the contractual obligations between owner and contractor. As
the cash flow forecasting is an approximate based on planned
site activities, the chances of inability to meet cash inflow
requirement, during construction stage, are significant. In
construction projects, it is a must to fix and meet specific dates
for regular cash outflows, such as salaries, loan repayments,
taxes and other administration expenses. Countless research
works have been directed towards the study of cash flow and
cash flow management due to their importance in the
progression of construction projects. Models have been
developed to help contractors planning their cash flow during
the tender stage. However, most of the existing models are
either project specific or do not address the consequences of
failure to meet minimum fund required for cash outflow. This
research work aims to find out the minimum fund required for
cash outflow in case of delay in payments. In addition, it
elucidates contractual obligations of cash flow on both the
owner and the contractor and the probable consequences of
failing to meet planned cash flow.
3. METHODOLOGY
A critical key to cash flow forecasting, during tender stage, is
how to build a cash outflow model. Validation of such a model
involves application of data from on-going projects. The data
should be recent, say during the last 12 months, projects should
be similar in terms of type, environment and location, and
governing laws are the same. Cash flow can be positive or
negative depending on payments received and expenditure
made on the site activities. The cash flow is affected by profit
margins, payment retention, payment delays and credit
agreements. In this research, data about 25 villas constructed in
3. IJRET: International Journal of Research in Engineering and Technology eISSN: 2319-1163 | pISSN: 2321-7308
_________________________________________________________________________________________
Volume: 03 Issue: 04 | Apr-2014, Available @ http://www.ijret.org 444
Muscat, Oman was collected from projects‟ files. The collected
data included the following:
1. Cash-inflow forecasting represented by:
a) Time schedule plans
b) Cost estimate of planned execution of works based on
the time schedule and detailed cost estimate
c) Contractual conditions such as contract value, retentions,
deductions, payment delay penalty
2. Cash-outflow calculation; mainly in a function of cost
estimate of planned execution of works. Mark-up is to be
removed from work executed to get cash outflow
represented by the cost incurred from production process
3. Calculation of minimum required fund to offset the
difference between the cash inflow and the cash outflow.
The data was analysed to identify the minimum cash required to
cover different periods of payment delay and the effects of
payment delay on contractor and owner. Payment delay was
sequentially incremented from no delay case to cases of four
weeks payment delay. Each one of the five delay cases (0, 1, 2,
3, 4 -week) was subjected to cash flow forecasting calculation
to find the minimum fund required to overcome the
consequences of delay. Interim profit is calculated for the
purpose of comparison with the expected profit. This
comparison would point out cases where the interim profit
value exceeds the maximum expected interim profit which is
seriously looked out. Table 1 shows the process of cash flow
calculation and the minimum fund required.
Table 1: Cash flow forecasting calculation
Week # 1 2 3 4 5
Value of
work
executed
As estimated
by contractor
Retention In Oman 5%
of the work
done
Expected
revenue
after
retention
C1=A1-B1
Expected
revenue
after
retention
and delay
C1 is to be
shifted due
to payment
delay
Cumulative
revenue D1 D1+D2
D1+
D2+
D3
D1+D2+D
3+D4
D1+D2+D
3+D4+D5
Expenditure Value of
work
executed/
(1+ mark-
up)
Cumulative
expenditure
F1 F1+F2
F1+F
2+F3
F1+F2+F3
+F4
F1+F2+F3
+F4+F5
loss/profit Difference between cumulative revenues and
cumulative expenditure (E-G)
4. RESEARCH SAMPLE
The 25 villas used as research sample can be considered as a
homogenous sample due to the fact that all of cases are:
1. Accomplished during one year (2011)
2. All contract types were lump sum
3. All villas are located in Muscat.
The collected data for the sample was:
1. Time schedule of villa construction
2. Breakdowns of payment scheme
3. Advance payment amount
4. Expected mark-up percentage.
5. RESULTS
All the studied 25 villas were subjected to cash flow analysis
using five different payment‟s delay periods (0, 1, 2, 3, 4 -
week). Table 2 shows results of the cash flow analysis and
required minimum fund to keep the execution continues. Table
3 shows the maximum profit earned during the process of
construction to be compared with respect to the expected profit
for the research sample in different payment delays.
6. DISCUSSION
The minimum fund required keeping the sample projects
running in case of the five delay periods and the interim
maximum profit compared payment delays were shown in
Tables 2 and 3 using the procedure set in Table 1. Here
discussion of results is presented
6.1 Effect of Payment Delay on the Minimum Fund
As to be expected, the minimum fund required for villa
construction is directly proportional to the time of payment
delay. The rate of change of the percentage of minimum fund
required becomes very pronounce in the three-week delay
period. In most cases, as the contract value increases the
percentage of the minimum fund increases. The average
percentage of minimum fund for four weeks delay was found to
be 8.5 per cent of the contract value. This fund should be
reserved by the contractor, from the working capital, for the
four-week scenario of delay in payment. Standard deviation of
1.29 per cent reflects homogenous and consistency of sample
regardless of the diversity and random selection of villas. For a
medium size villa with contract value of Rial Omani
50,000(USD 129,000)), the contractor has to ensure availability
of about R.O. 4,250 for possible delay in payment of four
weeks, which is considered reasonable for villa contractors.
This low amount of required fund would lead to high
competition among villa contractors leading to good quality and
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performance in construction industry, at the same time it
exposes villa construction business to high competition market.
The contractor may proceed with the execution of works
without reserved fund utilizing the advance payment of 10 per
cent provided that no delay more than one week is guaranteed
(rarely happens). Assuring minimum fund for possible delay in
payment would assure business continuity and avoid stoppage
or delay and enhance contractor reputation. The availability of
minimum fund for possible delay would relieve the client from
the worry of possible delay in completion and handover of the
property.
Table 2: Minimum fund vs. payment delay time
Villa
No.
Contract
value
% Percentage of minimum fund required based
on the delay in payments
0 1 2 3 4
1 40000 N/A 0.86 0.86 10.36 10.85
2 41300 N/A 2.98 2.98 8.61 8.61
3 24100 N/A N/A N/A 5.74 5.74
4 43300 N/A 3.77 3.77 3.77 3.77
5 44100 N/A N/A N/A 9.58 9.58
6 55000 N/A 2.98 2.98 8.04 8.04
7 80000 N/A 4.11 4.11 9.37 9.73
8 38260 N/A 7.68 7.68 7.68 7.68
9 67500 N/A N/A N/A 8.45 8.45
10 47800 N/A 3.03 3.03 8.67 8.67
11 64000 N/A 2.98 2.98 8.61 8.61
12 58800 N/A 2.98 2.98 8.61 8.61
13 49100 N/A 2.98 2.98 8.61 8.61
14 56600 N/A N/A N/A 8.61 8.61
15 47100 N/A N/A N/A 8.59 8.59
16 74800 N/A N/A 2.98 8.61 8.61
17 59700 N/A 3.14 3.14 9.08 9.08
18 60700 N/A 2.98 2.98 8.61 8.61
19 59850 N/A N/A N/A 9.58 9.58
20 69000 N/A 2.98 2.98 8.61 8.61
21 120000 N/A 3.3 3.3 3.3 8.05
22 157100 N/A 3.38 3.38 3.38 8.91
23 133000 N/A 3.3 3.3 3.3 8.92
24 145000 N/A 3.3 3.3 3.3 8.92
25 127800 N/A 3.3 3.3 3.3 8.92
Average N/A 3.335 3.32 7.37 8.49
Std. deviation N/A 1.22 1.19 2.37 1.29
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Table 3: Interim maximum profit vs. payment delay
Villa
No.
Contract
value
Advance
payment
Total
expected
profit
% Interim maximum profit earned
0 1 2 3 4
1 40000 5700 6666.67 5611.11 5611.11 5611.11 5611.11 5611.11
2 41300 4130 6883.33 4908.34 4908.34 4908.34 4908.34 4908.34
3 24100 5510 4106.67 5027.48 5510 5510 5510 5510
4 43300 10735 7216.67 10735 10735 10735 10735 10735
5 44100 4655 7350 5251.8 5251.8 5251.8 5251.8 5251.8
6 55000 5225 9166.67 6536.54 6536.54 6536.54 6536.54 6536.54
7 80000 6700 13333.33 8607.7 8607.7 8607.7 8607.7 8607.7
8 38260 5111 6376.67 5111 5111 5111 5111 5111
9 67500 7125 11250 8038.46 8038.46 8038.46 8038.46 8038.46
10 47800 4515 7966.67 5653.85 5653.85 5653.85 5653.85 5653.85
11 64000 6080 10666.67 7606.15 7606.15 7606.15 7606.15 7606.15
12 58800 5586 9800 6988.14 6988.14 6988.14 6988.14 6988.14
13 49100 5586 8183.33 5835.35 5835.35 5835.35 5835.35 5835.35
14 56600 5377 9433.33 12103.69 12103.69 12103.69 12103.69 12103.69
15 47100 4465 7850 10059.52 10059.52 10059.52 10059.52 10059.52
16 74800 7106 12466.67 8889.692 8889.692 8889.692 8889.692 8889.692
17 59700 5671.5 9950 7095.115 7095.115 7095.115 7095.115 7095.115
18 60700 5766.5 10116.67 7213.962 7213.962 7213.962 7213.962 7213.962
19 59850 6317.5 9975 7127.436 7127.436 7127.436 7127.436 7127.436
20 69000 6555 115000 8200.385 8200.385 8200.385 11327.5 11327.5
21 120000 11400 20000 14177.19 14177.19 14177.19 14177.19 14177.19
22 157100 14905.5 26183.33 18554.18 18554.18 18554.18 18554.18 18554.18
23 133000 12635 22166.67 15713.06 15713.06 15713.06 15713.06 15713.06
24 145000 13775 24166.67 17130.77 17130.77 17130.77 17130.77 17130.77
25 127800 12141 21300 15098.71 15098.71 15098.71 15098.71 15098.71
6.2 Contractual Implications of Cash Flow Forecasting
Contractual issue is one of the most essential factors in cash
flow forecasting. This factor might help the contractor to
increase or decrease the minimum fund required for a
construction project. Payment delay is the most effective
parameter to be taken into consideration which directly affects
the minimum fund required, which has to be recorded clearly in
the agreement between the owner and contractor. It would be
more beneficial for both parties to include minimum payment
delay, to allow certainty of budgeting and cash flow forecasting
on contractor‟s side. The client has to ensure timely payment
because any delay in payment leads to penalties and may cause
stoppage of site works.
Most of villa construction agreements are lump sum type in
which payments are distributed based on the accomplished
works or stage of construction such as (earthworks,
substructures, super structure finishes, etc.). A percentage of
contract value should be paid after each stage or milestone of
the work executed. The distribution of payments on the time
schedule is the second spot to be controlled, this distribution
should assure minimum payment for contractor and avoid over
payment by owner.
Contractor‟s inability to meet minimum fund required for cash
outflow would prevent achievement of contractual obligations
and lead to delay of some activities at the site. The failure to
6. IJRET: International Journal of Research in Engineering and Technology eISSN: 2319-1163 | pISSN: 2321-7308
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Volume: 03 Issue: 04 | Apr-2014, Available @ http://www.ijret.org 447
fulfil contractor‟s obligation towards suppliers and
subcontractors is another consequence of this problem. Inability
of payment by client is a source of disturbance for contractor
time schedule in this and other projects and affects his whole
operations of contracting. Some contractors keep their
contractual side free of surprises in terms of client payment
inability by assuring availability of different projects to utilize
his workforce and equipment in case of stoppage at one site.
Usually, this type of contractors stop the work till payment and
penalties of delay are received. On the other side, there is a risk
generated through the problem of payments which lead to
higher interim profit than the maximum expected. In this case
the contractor has received his profit in advance and the future
interim payments will be much less or of no profit. This case
has been noticed in the collected records particularly in case no.
14 and 15. Here, the possibility of the contractor leaving or
stopping the works is higher as he knows future cash inflow
may not be enough to cover the cash outflow.
7. CONCLUSIONS
From the study made in this research, the following concluding
remarks can be made;
Cash flow forecasting and management are perfect
tools to avoid risk of incompletion of construction
projects.
Properly planned and sized, timely interim payments
reduce the risk of imbalance cash in and out flows.
There is a proportional relationship between payment
delay and minimum fund required for villa
construction. It was found that the contractor can start
construction without any minimum fund by utilizing
the advance payment, provided that delay in interim
payment is guaranteed to be less than one week.
The distribution of payments should be carefully
designed based on milestone achievement related to
detailed cost estimate to avoid fund shortage leading to
stoppage of the construction process and to ensure that
contractor does not receive large profit at early stages
of the project.
The minimum fund required for a contractor to secure
completion of villa construction is 8.5 per cent of the
total contract value. This percentage is required for a
maximum delay in interim payment of four weeks.
A clear record should be made in the contract that
explicitly defines ways of handling payment delays,
penalties and work stoppage allowances.
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