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(CSC-929) Construction Schedules for Better Cash Flow Management

Primary Author: Mr Pete A Bassford PSP Hatch Mott MacDonald
Co-author(s): Mr Brian C Smith CCC Hatch Mott MacDonald

Audience Focus: Intermediate
Application Type: Experience-Based
Venue: 2012 AACE International Annual Meeting, San Antonio, TX, USA

Abstract: A State bonds millions of dollars per quarter to fund the State Department of Transportation's (State DOT) capital projects. Accuracy in forecasting the amount and timing of bonds to be sold is crucial in order to avoid incurring additional interest costs, or worse, underfunding projects that may result in delay or cancellation of projects. On a large central waterfront highway replacement program (the Program) in the Pacific Northwest, the mission is to replace an earthquake-damaged section of an elevated freeway with a new approach and interchange utilizing one of the largest design-bid-build projects (the Project) ever undertaken by the State DOT. The authors will demonstrate the methodology for how a contractor's construction cash flow for this freeway replacement was modeled using a summarization of bid-items (schedule of values). This methodology allowed for the development of an accurate cash flow that adjusted dynamically from month to month with the progress of the construction work, as well as the effect of schedule changes that were reflected through time-impact analyses. Both work progress and changes to the schedule affected estimates-at-completion forecasts and subsequent cash flow forecasts.