Risk-Integrated Cash Flow Forecasting for Overseas Construction Projects

다국어 초록 (Multilingual Abstract)

Construction firms have long attempted to forecast a project cash flow at the initial stage of a project, which is closely related to thepayment conditions and financing schedules. There are, however, diverse risk factors influencing project cash flow, in particular forthe domain of international projects, which often fluctuate because of a myriad of external as well as internal uncertainties. In thisresearch, risk factors that impact the soundness of cash flow are classified into two categories: financial risks and project-specificrisks. The former refers to the external economic conditions such as exchange rate, cost escalation, and interest rate which can beanalyzed through a probabilistic financial algorithm. Then, the project-specific risks such as host country’s geotechnical conditions,weather and climate differences, and resource delivery conditions are further assessed through utility curves to represent the firm’sunique risk perceptions and thresholds to the amount of risk exposures. Results of cash flow forecasts by the proposed approach arecompared with the actual cash flow of a retrospective case project. It is found that construction firms better decide on a decent levelof cash contingency and the probable net-profit at completion by the adoption of the proposed approach.

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