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(CSC-1742) Simplifying Cash Flow Analysis to Be An Effective and Manageable Tool

Primary Author: Mr. Jake Ortego PE CCP and Mr. Antonio Fratangelo CCP

Audience Focus: Intermediate
Application Type: Application
Venue: 2014 AACE International Annual Meeting, New Orleans, LA, USA

Abstract: Due to perceived complexity, many construction projects often abandon tracking actual cash flow as a tool to monitor and trend progress. There is a the belief that the initial cash flow curve ceases to represent an accurate model of the project as changes are made to scope and schedule. Many small to medium size projects may not have the technical resources to perform a detailed cash flow analysis and only use a basic ā€œSā€ curve as their model.

This paper will discuss three simplified yet dynamic concepts of Cash Flow modeling that can be applied to construction projects to help make the cash flow tool more accurate and possibly more manageable. These concepts are:
  • Discussion of dynamic equations to model cash flow curves for major cost categories
  • Stacking of major cost category cash flow curves to build the base curve
  • Adjusting the cash flow curves to account for changes at the summary level

It is the intent that these approaches may allow cash flow analysis to be a useful and manageable tool for a wide range of construction projects.