Cash Flow Defining The Construction Industry

Cash flow is one of the most critical aspects in the proper management of any company or industry. Success or failure in proper cash flow management ultimately plays a huge role in determining the success or failure of the company or industry as a whole. Cash flow exists at three levels, the company management level, at an individual manager level and at the individual level in terms of productivity. Cash flow can be observed as a series of transactions in a game. The interesting feature in the game is that the state of no-move by one player, as in a failure to pay, may lead to a game-ending move for another player. Cash flow is not like productivity, it is not completely controlled by factors in the company’s control, and even the best-managed companies may experience liquidity problems from time to time. This research develops the game and the game rules to study cash flow at a microeconomic level. The game represents a real life scenario; the decisions are taken based on input data and prior knowledge. The game result is a cash flow model. The cash flow model provides input data for a statistical analysis of the output data. Most cash flow decisions are made by a manager with limited autonomy and often no real control occurs at the financial management level. The personal responsibility levels are moderate and the returns based on the decisions made are sometimes hard to determine. The developed game rules model such a situation, providing a Superintendent with a scenario to control cash flow for a theoretical site and contract. The game output will provide a data set to review the Superintendent’s performance in managing the cash flow presented in the game. Further research will use the game to study individual players and compare the results