Financial Management, Construction Economics, and Budget Control:
Cash Flow Analysis
Lesson Plan #5
LESSON GOALS AND OBJECTIVES:
The cash flow analysis lesson enables the student to recognize the different types of cash flows on a project and be able to predict cash flows. The concept of overdraft accounts is presented.
Managing cash flows is important to the financial success of a project and ultimately the company. In construction, there are several types of cash flows. Most notably, the payments from the owner can significantly lag behind the actual occurrence of costs. Knowing the cash flows of a project enables a contractor to determine maximum cash outlay required. If that much cash is not available, the contractor must obtain construction financing and account for the costs of the financing as part of the project.
o Types of cash flow in a project
o Cash flow projections
o Overdraft accounts