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

Xie, Hongtao; Zheng, Junwei; Zhang, Yunhua; Li, Hongyang

doi:10.3390/su11154115

Cited by 9 publications

(3 citation statements)

References 54 publications

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“…Hou et al [28] proposed a model to explore the behavior of project cash flow system and profitability under different payment problems and conditions. Another study by Xie et al [29] modeled the impacts of delayed payment on the progress of construction projects and concluded that shortening the payment period for contractors and subcontractors will accelerate the flow of funds and ensure smooth progress. Furthermore, Dabirian et al [6] presented a model to analyze the effects of financial policies related to owners, financial institutions, labor, and suppliers on contractors' cash flow.…”

Section: Cash Flow Management In Construction Projectsmentioning

confidence: 99%

Integrated Agent-Based Simulation and Game Theory Decision Support Framework for Cash Flow and Payment Management in Construction Projects

Dorrah,

McCabe

2023

Sustainability

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Effective cash flow management has become crucial for projects and stakeholders given the wide payment-related problems and financial risks encountered in the construction industry worldwide. Previous studies mostly addressed cash flow and payments from the perspective of a specific stakeholder, resulting in an imbalanced cash flow management culture that is further intensified by the power asymmetry of the top-down payment decision-making process. This research proposes an adaptive decision support framework for evaluating and negotiating payment options in construction projects while incorporating the individual and collective financial roles of stakeholders. The framework is comprised of three modules for data acquisition, payment simulation, analysis, and negotiation, as well as decision support. It integrates agent-based simulation, data envelopment analysis, and game theory for a multi-level study of project performance while capturing the driving forces of stakeholders in payment negotiations. A case study project is used to demonstrate the framework implementation under varying payment conditions and interest rates. The results provide quantitative profiles of stakeholders to identify incurred charges, balanced payment conditions, and suitable compensation. Finally, the framework can be utilized by stakeholders and jurisdictions to move towards enhanced contractual arrangements that alleviate economic and financial risks with the informed collaboration of its entities.

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Section: Cash Flow Management In Construction Projectsmentioning

confidence: 99%

Integrated Agent-Based Simulation and Game Theory Decision Support Framework for Cash Flow and Payment Management in Construction Projects

Dorrah,

McCabe

2023

Sustainability

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“…Cui et al (2010) applied SD to evaluate the effect of some cash policies and project operation on the project cash flow. Xie et al (2019) employed SD to evaluate the effects of payment delays on construction projects progress, especially cash flow. The simulation results of the study indicated that shortening the payment period as a powerful policy will accelerate the flow of funds and smoothen the project progress.…”

Section: Introductionmentioning

confidence: 99%

“…(2010) applied SD to evaluate the effect of some cash policies and project operation on the project cash flow. Xie et al. (2019) employed SD to evaluate the effects of payment delays on construction projects progress, especially cash flow.…”

Section: Introductionmentioning

confidence: 99%

Analyzing the impact of financial policies on construction projects performance using system dynamics

Dabirian

Ahmadi

Abbaspour

2021

ECAM

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PurposeThe research aims to analyze the effects of financial policies on a cash flow system to meet project performance goals and improve profitability. The policies are divided into four groups; owner related, bank-related, labor-related and supplier-related policies. This research presents a developed model for planning, forecasting and managing the cash flow in construction projects using system dynamics (SD).Design/methodology/approachA System Dynamics (SD model is developed to evaluate the effect of different financial policies on construction project performance. By identifying the feedback loops in the cash flow system, a dynamic model is developed to forecast, plan and manage different policies, including prepayment, overbilling, loans, incentive payment, delay in payment and equipment lease.FindingsA case study (a construction activity as part of a pharmaceutical factory development project) is used to analyze the cash flow and financing policies. The findings demonstrate the effects of different policies such as incentive payments on project cash flow estimation, which proved to reduce the project duration, improve the profit and increase the financing during the project execution.Originality/valueThe presented model would be a major attempt to estimate precisely the cash flow and the effect of employing different financial policies on project performance. Applying this model, project managers and decision-makers have the opportunity to model different financial policies concerning a variety of limiting variables applicable to each situation. Ultimately, with this, one can make more reasoned decisions and, in effect, optimize the utility of the project.

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Optimization of Financial Flows in a Building Company Using an Escrow Account in the Russian Federation

Ketova

Vavilova

2020

Recent Research in Control Engineering and Decision Making

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

Cited by 9 publications

References 54 publications

Integrated Agent-Based Simulation and Game Theory Decision Support Framework for Cash Flow and Payment Management in Construction Projects

Integrated Agent-Based Simulation and Game Theory Decision Support Framework for Cash Flow and Payment Management in Construction Projects

Analyzing the impact of financial policies on construction projects performance using system dynamics

Optimization of Financial Flows in a Building Company Using an Escrow Account in the Russian Federation

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