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The Interaction of Contractor’s Cost Flow with Operational Practice: A Simulation Study
Luleå University of Technology, Department of Civil, Environmental and Natural Resources Engineering, Structural and Construction Engineering.
Luleå University of Technology, Department of Civil, Environmental and Natural Resources Engineering, Structural and Construction Engineering.
Luleå University of Technology, Department of Civil, Environmental and Natural Resources Engineering, Structural and Construction Engineering.
2013 (English)Conference paper, Presentation (Refereed)
Abstract [en]

The construction companies are struggling for cost control in construction projects. This is often based on cost estimation of scheduled activities. A project may fail due to lack of cash even if it is profitable. The cash flow presents dynamic characteristic which is changing with time progress and it is influenced by the uncertainty project environment, such as supply chain variation, equipment failure and the deviation of working efficiency.At the same time, the increasing market competition forces these companies to transfer from the traditional practice to more advanced and efficient practices, such as lean or flexible production. However, to use lean or flexible production might not prove successful unless the practices are introduced in the right environment. The resources are used in a very efficient way concerning lean, but the practice demand a high degree of predictability. The opposite is true for a flexible production. The resources are not used as efficient but can then on the other hand handle variation better than lean. The research is based on the question: How does managerial operational practices and variation in production influence the cash flow? A model is proposed to simulate and forecast the cash flow considering the uncertainty project environment and selected operational practice. A case study including six scenarios (high and low variation, three operation practices) is used to illustrate the proposed model. A conclusion is that it is important to consider both managerial aspects as well as operational aspects in order to avoid sub-optimization in production. From the cash flow management perspective, the proposed model can assist the contractor to forecast the cash flow and synchronize the operational practices with project environment

Place, publisher, year, edition, pages
2013.
Research subject
Construction Engineering and Management
Identifiers
URN: urn:nbn:se:ltu:diva-34447Local ID: 8a702eca-efa5-4009-bbac-838d67aa772cOAI: oai:DiVA.org:ltu-34447DiVA: diva2:1007698
Conference
International Conference CIB W78 : 16/11/2010 - 18/11/2010
Note
Godkänd; 2013; 20140407 (welu)Available from: 2016-09-30 Created: 2016-09-30Bibliographically approved

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