Abstract
Finance-based scheduling approaches have been proposed in the literature to produce financially executable schedules in construction projects. Although some research has reported the importance of considering the time interval between subcontractors’ requests for payment and the actual disbursements on the cash flow calculation, which affects the accuracy of cash flow analysis, none of literature has considered the subcontractor payment time delay to help resolve the cash available limitation problems in the finance-based scheduling model. This paper modified the existing finance-based scheduling models to account for varying contractor-to-subcontractor payment arrangements (Billing Date: BD and Payment Time Delay: PTD) for individual work packages. The proposed method was validated using a five-activity project and was compared with the solution of the traditional method. The comparison of the results showed considerable differences of the financial performance of the proposed method. Finally, the sensitivity analysis was used to investigate the effect of two factors (BD and PTD) on the projected maximum overdrafts and financing costs. The analysis showed that shifting the BD toward the end of period increased the project finances but that extending the PTD decreased the project finances when the project period elapsed. Thus, the modified model enables managers to produce fewer project overdrafts and lower financing costs. In addition, the analysis demonstrates the usefulness of properly arranging subcontractor payments to meet the financial constraints of the contractor.
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Tabyang, W., Benjaoran, V. Modified finance-based scheduling model with variable contractor-to-subcontractor payment arrangement. KSCE J Civ Eng 20, 1621–1630 (2016). https://doi.org/10.1007/s12205-015-0581-z
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DOI: https://doi.org/10.1007/s12205-015-0581-z