Cash Flow Management of Construction Projects in Saudi Arabia

Shash, Ali A.; Qarra, Abdulaziz Al

doi:10.1177/8756972818787976

Cited by 26 publications

(17 citation statements)

References 20 publications

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“…Consequently, some contractors use the cash flow of one project to finance different project deficits [71]. This result is in line with some of the investigated studies [2,[71][72][73]. The Saudi contractors need to adopt effective cash flow management practices that require planning, monitoring, and controlling cash inflow and outflow at both the company and project levels to achieve financial success and avoid project deficits.…”

Section: Ranking Of Riskssupporting

confidence: 56%

“…Although these grades determine the maximum project budget size that allow contractors to bid for (an upper limit), it does not consider the maximum number of projects (the total financial limit of all awarded projects) [39]. Consequently, some contractors use the cash flow of one project to finance different project deficits [71]. This result is in line with some of the investigated studies [2,[71][72][73].…”

Section: Ranking Of Risksmentioning

confidence: 76%

“…Contractors' financial difficulties (ineffective cash flow management) was ranked as the first major risk factor in this study. Shash and Qarra [71] conducted a study that revealed that 40% of contractors in Saudi Arabia experience financial failure due to poor cash flow management. Saudi contractors' classification system classifies contractors to a five-grade scale.…”

Section: Ranking Of Risksmentioning

confidence: 99%

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Risk Factors That Lead to Time and Cost Overruns of Building Projects in Saudi Arabia

2022

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Rapid transformation across all sectors through Saudi Arabia’s vision 2030 initiatives led to an increase in construction activities. However, the construction industry has been already facing huge cost and time overruns, affecting all stakeholders. The aim of this study is to identify and explore the influential risk factors that lead to completion delays and cost overruns of government-funded building construction projects in Saudi Arabia, all of which have been subjected to a traditional type of procurement method (Standard Public Works Contract). The literature examined in this study identified a total of 83 risk factors, which have been grouped into nine categories. A questionnaire-based survey was conducted to determine the participants’ perspectives on the degree of probability of occurrence (P) of each risk and its potential impact on a project in terms of time (IT) and cost (IC). The questionnaire survey was distributed to 200 experts and professionals associated with Saudi building construction projects, which were grouped into four categories: clients, designers, consultants, and contractors. Fifty-five acceptable questionnaires were returned and analysed. The relative importance index (RII), and Risk Importance (RI) were used to identify the most influential risk factors, and an agreement test was conducted. The results of the survey revealed that the most significant risks factors contributing to the delay of building construction projects’ completion are contractor’s financial difficulties, owner’s delay in making progress payments for completed works, contracts awarded to the lowest bidder, change orders during construction, ineffective project planning and scheduling by the contractor, shortage of manpower, and contractor’s poor site management and supervision. In addition, change orders during construction and contracts awarded to the lowest bidder are the most significant risks factors of exceeding budgets. Based on the results, it is concluded that for achieving sustainable development, client, contractor, and labour-related risks must be effectively managed.

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Section: Ranking Of Riskssupporting

confidence: 56%

Section: Ranking Of Risksmentioning

confidence: 76%

Section: Ranking Of Risksmentioning

confidence: 99%

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Risk Factors That Lead to Time and Cost Overruns of Building Projects in Saudi Arabia

2022

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“…Cash flow management is the main role of project financial control. The cash flow management is considered the main indicator of a business's financial health and implying proper cash flow management is crucial to the construction business survival (Shash and Qarra, 2018).…”

Section: Introductionmentioning

confidence: 99%

Difference in S-Curve for Different Types of Construction Projects

Soliman¹,

Alrasheed²

2021

JER is an international, peer-reviewed journal that publishes f

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Project cash flow and contractor S-curve are tools that can be used to measure, control and anticipate project progress. Few studies dedicated to evaluate and judge the behaviour of the original S-curve. This study aims to evaluate the similarities and changes of construction projects S curves between different project types. More than 40 S-curves were collected from the state of Kuwait for different types of construction projects. The list of collected curves divided into six groups based on the type of client, no of buildings and number of floors. Statistical analysis used to compare the curves inside each group of projects. Statistical analysis using test of normality, T-paired test then Standard Euclidean Distance were applied to evaluate the similarity and changes between groups. This study revealed that there is a level of similarity of S-curves for high rise buildings and there is no similarity of S-curves for one or multi-building projects. The maximum gap between S-curves for one and high rise building laying in the middle part of project duration, while the maximum gap between S-curves for multi-building project laying in 70% to 80% of project duration. This study revealed that the variance of S-curve behaviour indicating there is no common attitude for all types of construction project types. This study can help construction stakeholders to anticipate their expected expenses and help in project cash flow management.

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“…However, the payment delay in the construction industry propagates from the top to the end of the supply chain. In the construction industry, owners at the top of the supply chain are mostly capital-intensive enterprises that can easily acquire funds and avoid risks, while most subcontractors at the end of the supply chain are labor-intensive firms with limited funds and risk resistance [10]. Therefore, if the payment delay terms of the project contract are set improperly and the contractor does not have a large fund reserve, the contractor may often encounter a fund shortage later in the construction period, which can easily lead to dried up cash flow and delayed wage payments [11][12][13].…”

Section: Introductionmentioning

confidence: 99%

Effects of Payment Delays at Two Links in Payment Chains on the Progress of Construction Projects: System Dynamic Modeling and Simulation

et al. 2019

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Payment is the lifeblood of construction projects. However, steady fund flow is rare in construction projects. This paper focused on a quantitative evaluation of the impact of payment delays at the two links (i.e., from owner to general contractor and from general contractor to subcontractor) on the progress of a construction project. A hybrid research method combining the interpretative structural modeling (ISM) method and system dynamics was used to simulate the complex relationships between a payment delay and project progress. Four distinct payment policies are quantitatively simulated to reveal the impact of payment delays at the two links on the progress of a construction project. The results show that shortening the payment period at the two links in the payment chain will accelerate the flow of funds and relieve the burden on contractors in providing advance funds in terms of amount and duration, making them powerful measures to ensure smooth progress. The other three payment policies require that the subcontractor provide large sums of advance funds for lengthy periods to ensure smooth project delivery.

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Cash Flow Management of Construction Projects in Saudi Arabia

Cited by 26 publications

References 20 publications

Risk Factors That Lead to Time and Cost Overruns of Building Projects in Saudi Arabia

Risk Factors That Lead to Time and Cost Overruns of Building Projects in Saudi Arabia

Difference in S-Curve for Different Types of Construction Projects

Effects of Payment Delays at Two Links in Payment Chains on the Progress of Construction Projects: System Dynamic Modeling and Simulation

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