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A Study of the Cash Flow Forecasting Impact on the Owners Financial Management of Construction Projects in the State of Kuwait

Asian Business Research

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Title A Study of the Cash Flow Forecasting Impact on the Owners Financial Management of Construction Projects in the State of Kuwait
 
Creator Kotb, Moustafa
Ibrahim, Mohamed Abdel Razik
Al-Olayan, Yousef Saleh
 
Description Cash flow is considered to be the main acceleration’s factor of any construction contract, which has a large and direct impact on projects completion dates as well as the project contractual duration. This is very evident when examining how the owners benefit from their projects in achieving or forfeiting the desired economic feasibility determined in the feasibility study of any project.It is noted that the cash flow plan is issued through a Critical Path Method (CPM) for a project which entails only an estimate of the monetary value of the construction work to be carried out on site and on a rough and approximate basis using the cash flow’s curve (S-CURVE), which is usually gives a different value from the actual work performed onsite.The impact of this problem on financial management for any project is as follows:In the case of underestimation, if the available estimates are less than the required cash flow, it is considered as a major cause for delay in project completion as well as the inability of the owner to achieve the economic feasibility Internal Rate of Return (IRR) required for the project. Also, this leads to monitory error due to the financial compensations due to the contractor as a result of the damage caused by time extensions due to the holdings of the cash entitlements.In the case of overestimation of the value of the required cash flow with a high margin of error, this leads to the monetary waste of amounts that could have been invested in other ventures, projects or opportunities.This paper provides a summary of the importance of determining the appropriate amount of cash flows required to be provided by the owner’s financial management, which leads to achieving the appropriate projects financial management gains and thus reducing financial losses or disputes in construction projects in the State of Kuwait.
 
Publisher July Press Pte. Ltd.
 
Contributor
 
Date 2018-02-27
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journal.julypress.com/index.php/abr/article/view/351
10.20849/abr.v3i1.351
 
Source Asian Business Research; Vol 3, No 1 (2018); p69
2424-8983
2424-8479
 
Language eng
 
Relation http://journal.julypress.com/index.php/abr/article/view/351/271
 
Rights Copyright (c) 2018 Moustafa Kotb, Mohamed Abdel Razik Ibrahim, Yousef Saleh Al-Olayan
http://creativecommons.org/licenses/by/4.0