cash flows for construction projects

《cash flows for construction projects》由会员上传分享，免费在线阅读，更多相关内容在工程资料-天天文库。

1、CHAPTER12CashFlowsforConstructionProjectsInthischapteryoulearntodevelopacash-flowprojectionforaconstructionprojectfromboththeperspectiveofaconstructioncompanythatisreceivingprogresspay-mentsordrawsfromtheproject’sownerandfromtheperspectiveofaconstructioncompanythatrec

2、eivesasinglepaymentwhentheprojectissold—suchasisthecasewithmanyhomebuilders.Forcompaniesineitherofthesesituations,thecom-panymustpayforsomeoralloftheconstructioncosts—especiallylabor—fromthecompany’sfundsbeforebeingreimbursedforthesecosts.Tocoverthesecoststhecompanyne

3、edscash.Becauseinadequatefundingonthepartoftheconstructioncompanycanspelldoomtoaconstructionprojectaswellastoallofthecompaniesinvolved,itisimportantthatmanagersaccuratelyprojectboththeamountandtim-ingofthecashrequiredbyaconstructionproject.Anunderstandingofthecashflow

4、foraconstructionprojectisaprerequisitetopreparingacashflowforanentirecon-structioncompany,whichisdiscussedinChapter14.Therearetwoprimarythreatstoaconstructioncompany’sfinancialfuture.Thefirstthreatisalackofprofitability.Thesecondthreatisinsufficientcash.Insuf-ficientc

5、ashiswherethecompanylackssufficientfundstopaythebillsthataredue.Acompanymaybeprofitableandstillfailbecauseitlackssufficientcash.Inthischapterwelookatthecashneededtoconstructindividualprojects.Thecashgeneratedbyaprojectisequaltothecashreceiptslessthecashdis-bursements.

6、Ifthecashdisbursementsarelessthanthecashreceiptsforapro-ject,theprojectwillbegeneratingcashforusebythecompanyonotherprojects,tocovergeneraloverhead,orprovideaprofittotheowners.Whenaprojectisgeneratingcashthecashflowwillbepositive.Ifthecashdisbursementsexceedthecashrec

7、eiptsonaproject,thecompanywillneedtosupplycashtofundtheprojectandthecashflowwillbenegative.Mostconstructionprojectsrequiretheinvestmentofcashatthebeginningoftheprojectand,iftheyareprofitable,gen-eratecashneartheendoftheproject.Withalargeportionofacompany’sfinancialass

8、etstiedupintheformofcashusedtofundconstructionprojects,itisimportantthataconstructionmanager259260CHAPTER12understandshowthe