Project Management Institute

Cash flow forecasting and updating for building projects

Cash flow management is crucial in providing day-to-day support for construction activities during building projects. This article surveys several cash flow forecasting models as well as several cost flow forecasting models, and shows how they can be variously used and combined to produce a more accurate overall picture of cash and cost flow forecasting. Building construction is often subject to constant changes in schedules, costs, and resources. Several mathematical updating models are discussed that enable relatively accurate forecasting, even when limited data is available. The model presented can either display discrepancies between forecast and actual progress in linear distributions over the residual duration of the project, or through the recalculation of an S-curve that plots cumulative cost over time.
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