Project controls for a construction contractor is a multi-layered undertaking that goes well
beyond the challenges of just controlling project cost. While cost is clearly important, equally
important to control are revenue, margin and cash flow. A contractor’s delivery of a project relies
heavily on the careful and concurrent management of all these dimensions for it to be a success.
Delivering a project’s scope on time and on budget may well be a primary goal; however, if they don’t achieve their desired profit, the project, for them, will be a fail, putting their company at risk. It would be an over-simplification to believe that if cost is controlled then profit will naturally follow. Making an assumption like that would presume that project cost and revenue flow roughly the same, are dependent on each other, and are defined by the same structures. This is simply not true as cost and revenue can have very different deliverables, payment schedules, structures and terms. For contractors, the terms of the contract payment schedule with the client will define how revenue will be recognized and claimed, which is typically managed separately from how cost is recognized on the project.
The net effect of this can mean that contractors may face weathering the low points of available cash as they await payments from the client, which can result in funding the project for periods of time. This paper will shed light on the importance of how managing and forecasting cash flow for both cost and revenue is critical for contractors as they juggle the finances of multiple concurrent projects. It will show how new technology can help plan, forecast and visualize complex cash flow scenarios, along
with the intricacies of various contract types – such as fixed price, unit price, time & materials – and their unique deliverables and payment terms.