Category: Quantities & pricing
Prepared by Eng. Ahmed Fathy, Projects Manager ·
Definition
Cash flow is a month-by-month schedule of when project costs are paid and when payments are received, showing the gap the contractor must finance.
Why it matters on a project
A project that is profitable on paper can fail if cash flow is negative for months. Tying payments to programme milestones protects liquidity.
Measurement and pricing
Built from the programme by spreading each activity's cost over its duration.
Common mistake
Accepting late payment terms without working out their effect on financing.
Frequently asked questions
How can project cash flow be improved?
With an advance payment, milestone payments tied to the programme, timely payment applications and suitable supplier terms.
What is the difference between profit and cash flow?
Profit is the final difference between income and cost; cash flow is when money comes in and goes out during the job.
Related terms
- S-curveA cumulative progress or cost curve over time.
- Payment application (IPC)A periodic payment request based on approved progress and executed quantities.
- Baseline programmeThe programme approved at project start against which progress is measured.
- Advance paymentAn amount paid to the contractor at the start and recovered from payments.
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