CASH FLOWS FOR CONSTRUCTION PROJECTS推荐.pdfVIP

C H A P T E R 12 Cash Flows for Construction Projects In this chapter you learn to develop a cash-flow projection for a construction project from both the perspective of a construction company that is receiving progress pay- ments or draws from the project’s owner and from the perspective of a construction company that receives a single payment when the project is sold—such as is the case with many homebuilders. For companies in either of these situations, the com- pany must pay for some or all of the construction costs—especially labor—from the company’s funds before being reimbursed for these costs. To cover these costs the company needs cash. Because inadequate funding on the part of the construction company can spell doom to a construction project as well as to all of the companies involved, it is important that managers accurately project both the amount and tim- ing of the cash required by a construction project. An understanding of the cash flow for a construction project is a prerequisite to preparing a cash flow for an entire con- struction company, which is discussed in Chapter 14. There are two primary threats to a construction company’s financial future. The first threat is a lack of profitability. The second threat is insufficient cash. Insuf- ficient cash is where the company lacks sufficient funds to pay the bills that are due. A company may be profitable and still fail because it lacks sufficient cash. In this chapter we look at the cash needed to construct individual projects. The cash generated by a project is equal to the cash receipts less the cash dis- bursements. If the cash disbursements are less than the cash receipts for a pro- ject, the project will be generating cash for use by