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Cash flows and stalled projects
On: Sat 12/17/2011 18:36
D. Faisal bin Al Alfdaa
mabatshy_ (at) _yahoo.com
The success of the management of any project on the balance in its cash flows and good liquidity management. When the project requires the owner to pay it in order to implement the contract value depending on the progress of achievement and the adoption of the supervisor. The Contractor is not required him to finance the project, and therefore should receive the dues quickly and regularly so that he can finance the project. The delay in the disbursement of dues of the contractors, and this lack of cash flows received, a major cause of delays in projects and perhaps cumbersome, and the cash flows of the tax the contractor if they do not balance with the cash flows received, and the availability of liquidity supports the project manager to take bold decisions focused on risk avoidance , and drainage work early to deliver the project on time. It is also a factor in reducing the cost of the project, thereby increasing profitability and positive cash flows enables the Project Manager to cover the bar to overcome problems and make sure not to influence the agenda of the project. At the time affect the cash flows negatively affected the project, the beginning of the delayed schedule for the inability of the contractor to exchange the items and the work of the project, and increased costs related to the project, and the multiplication of problems related to it, in addition to the frustration that affects its workers, and therefore unhappy parties to the contract and affected stakeholders in all this.
Resulting lack of liquidity of an imbalance in expenditures and revenues for the project, an increase of expenditure on the project derived from the revenues, and thus forced the contractor to the exchange on the project either from the income of other projects, and thus affected by all the projects that have, or borrowing to finance the project from financial institutions or than any others. The weakness of financial management when contractors and their inability to manage cash flows for the group projects that have put them in a critical relationship with the parties to the contract or even with the financial institutions that support them, where not to apply for lifting of abstracts for each project on a regular basis, and used cash flows from a project or two or even several projects to cover the costs of all projects and other administrative expenses of the company, the equation is balanced doomed to failure with time. Perhaps the lack of rehabilitation of the project managers in the financial aspects of the cause of poor financial management of contractors in general. There are also reasons related to contracts, supervision and Exchange CAS, formula currently approved for the holding of public works does not respect the cash flow in practice, what is called for in the contracts to extract at least one monthly not share supervision and adoption, and adoption supervision does not take its financial procedures long-term exposed to extract, and in fact confirms the presence of imbalance in how the adoption and exchange extracts, leading to delay in months. At a time shut the doors for the contractors when they need the funding of their projects, and result in delayed payment of the extracts and the lack of funding sources to faulty cash flows and lack of balance, and thus their negative impact on the project. The solution may be in the stringent procedures for the reduction of the delayed payment of dues of the contractors, and raise the level of culture of the parties to the contract and project managers in particular the financial management of projects both in terms of estimated costs or cash flow or how the financial control in accordance with schedules.
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On: Sat 12/17/2011 18:36
D. Faisal bin Al Alfdaa
mabatshy_ (at) _yahoo.com
The success of the management of any project on the balance in its cash flows and good liquidity management. When the project requires the owner to pay it in order to implement the contract value depending on the progress of achievement and the adoption of the supervisor. The Contractor is not required him to finance the project, and therefore should receive the dues quickly and regularly so that he can finance the project. The delay in the disbursement of dues of the contractors, and this lack of cash flows received, a major cause of delays in projects and perhaps cumbersome, and the cash flows of the tax the contractor if they do not balance with the cash flows received, and the availability of liquidity supports the project manager to take bold decisions focused on risk avoidance , and drainage work early to deliver the project on time. It is also a factor in reducing the cost of the project, thereby increasing profitability and positive cash flows enables the Project Manager to cover the bar to overcome problems and make sure not to influence the agenda of the project. At the time affect the cash flows negatively affected the project, the beginning of the delayed schedule for the inability of the contractor to exchange the items and the work of the project, and increased costs related to the project, and the multiplication of problems related to it, in addition to the frustration that affects its workers, and therefore unhappy parties to the contract and affected stakeholders in all this.
Resulting lack of liquidity of an imbalance in expenditures and revenues for the project, an increase of expenditure on the project derived from the revenues, and thus forced the contractor to the exchange on the project either from the income of other projects, and thus affected by all the projects that have, or borrowing to finance the project from financial institutions or than any others. The weakness of financial management when contractors and their inability to manage cash flows for the group projects that have put them in a critical relationship with the parties to the contract or even with the financial institutions that support them, where not to apply for lifting of abstracts for each project on a regular basis, and used cash flows from a project or two or even several projects to cover the costs of all projects and other administrative expenses of the company, the equation is balanced doomed to failure with time. Perhaps the lack of rehabilitation of the project managers in the financial aspects of the cause of poor financial management of contractors in general. There are also reasons related to contracts, supervision and Exchange CAS, formula currently approved for the holding of public works does not respect the cash flow in practice, what is called for in the contracts to extract at least one monthly not share supervision and adoption, and adoption supervision does not take its financial procedures long-term exposed to extract, and in fact confirms the presence of imbalance in how the adoption and exchange extracts, leading to delay in months. At a time shut the doors for the contractors when they need the funding of their projects, and result in delayed payment of the extracts and the lack of funding sources to faulty cash flows and lack of balance, and thus their negative impact on the project. The solution may be in the stringent procedures for the reduction of the delayed payment of dues of the contractors, and raise the level of culture of the parties to the contract and project managers in particular the financial management of projects both in terms of estimated costs or cash flow or how the financial control in accordance with schedules.
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