Construction Project Cash Flow Planning by Pareto Optimality Efficiency Network Model

Cash flow is crucial for ensuring the viability of a project. It consists of a complete history of all cash disbursement, cash shortage, loans, cost of money, and all earnings received. Although significant research work has been conducted on cash flow forecast, planning, and management, the objective is constantly the maximization of profit/final cash balance, or minimization of total project cost. Moreover, cash flow forecasting needs to be effective and fast. The paper develops multiple-objective cash flow planning model – Pareto optimality efficiency network model, which considers typical banking instruments, the constraints of the financial market, the budget constraints, and retention of money. A case study illustrates the multi-objective project cash flow management approach by applying the proposed model to a real world problem. A what-if-analysis depicts the tradeoff between profitability and loan interests, which are major issues in project cash flow planning and management. The model presents an effective decision making tool to be used by industry practitioners with reasonable accuracy.