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Original scientific paper

Contractor’s Financial Estimation based on Owner Payment Histories

Hanh Tran
David G. Carmichael

Fulltext: english, pdf (543 KB) pages 481-489 downloads: 795* cite
APA 6th Edition
Tran, H. & Carmichael, D.G. (2012). Contractor’s Financial Estimation based on Owner Payment Histories. Organization, technology & management in construction, 4 (2), 481-489. Retrieved from https://hrcak.srce.hr/94292
MLA 8th Edition
Tran, Hanh and David G. Carmichael. "Contractor’s Financial Estimation based on Owner Payment Histories." Organization, technology & management in construction, vol. 4, no. 2, 2012, pp. 481-489. https://hrcak.srce.hr/94292. Accessed 28 Sep. 2021.
Chicago 17th Edition
Tran, Hanh and David G. Carmichael. "Contractor’s Financial Estimation based on Owner Payment Histories." Organization, technology & management in construction 4, no. 2 (2012): 481-489. https://hrcak.srce.hr/94292
Harvard
Tran, H., and Carmichael, D.G. (2012). 'Contractor’s Financial Estimation based on Owner Payment Histories', Organization, technology & management in construction, 4(2), pp. 481-489. Available at: https://hrcak.srce.hr/94292 (Accessed 28 September 2021)
Vancouver
Tran H, Carmichael DG. Contractor’s Financial Estimation based on Owner Payment Histories. Organization, technology & management in construction [Internet]. 2012 [cited 2021 September 28];4(2):481-489. Available from: https://hrcak.srce.hr/94292
IEEE
H. Tran and D.G. Carmichael, "Contractor’s Financial Estimation based on Owner Payment Histories", Organization, technology & management in construction, vol.4, no. 2, pp. 481-489, 2012. [Online]. Available: https://hrcak.srce.hr/94292. [Accessed: 28 September 2021]

Abstracts
A contractor’s financial viability is affected by late and incomplete payments from the owner. Late and incomplete payments lead to cash flow uncertainty, additional bank interest, and delays in paying creditors such as suppliers and subcontractors, and may lead to decreased project
performance, and possible additional time and cost due to disputes. The paper presents a method for cash flow and present value analysis under uncertainty based on an owner’s payment history or estimated payment characteristics. The paper generalises existing modelling of uncertainty associated with late and incomplete owner payments to a range of claim types by the contractor, and different owner types. Aging contractor claims are analysed for claims submitted on a regular basis for amounts which may vary depending on project phasing. For each of the pre-identified typical owner payment practices, the estimated paid proportions of claims and the steady state distribution of payments in different age categories are established. A present value analysis assesses project viability from the contractor’s viewpoint. Actual project data are used to confirm the validity of the method. The intent of the paper is to assist contractors establish suitable allowances in their tender pricing, to choose a suitable claim/payment schedule and/or to adopt suitable administration practices to optimise cash flow. The paper gives a summary approach for contractors, providing them with a practical tool in cash flow planning, control and risk management.

Keywords
Cash flow; Markov chains; contractor payment; owner classification

Hrčak ID: 94292

URI
https://hrcak.srce.hr/94292

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