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Deciding the Way Forward of Construction Contracts During Cash Flow DeficitsAbdulla GaladariMassachusetts Institute of Technology (MIT); Masdar Institute of Science and Technology (MIST); Higher Colleges of Technology Ayub Al-Yousufaffiliation not provided to SSRN AbdulAzeez Al-Alizaffiliation not provided to SSRN Arif Ustadiaffiliation not provided to SSRN October 11, 2011 International Conference on Financial Theory and Engineering, Dubai, United Arab Emirates, December 28-30, 2009 Abstract: When a developer is building different construction projects simultaneously, cash flow management is very important. If the actual cash flow has been reduced than expected, the developer may need to decide which of the projects need to proceed and which need to be either suspended or terminated. This paper builds a financial model that evaluates the various construction projects based on the status of the project technically and financially to determine the decision path that needs to be undertaken for each project, based on a multivariate approach from the expected cash inflow, priority, likelihood, and time of construction. The model builds a chain of possible outcomes, where a project may be temporarily put on hold for a while and then resumed by cash inflow expected from previous projects.
Number of Pages in PDF File: 5 Keywords: multi-criteria decision analysis, cash flow deficit, evaluation, prioritization, construction financial model, contract termination, suspension, decision chain JEL Classification: G3 Accepted Paper SeriesDate posted: October 13, 2011 ; Last revised: February 18, 2012Suggested CitationContact Information
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