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A technique is developed for modeling the cash flow of a construction project. Alternative methods of specifying cost and earnings flows allow great flexibility in modeling a variety of project and contractual conditions. The net interest, cost, and present worth associated with a given cash flow is calculated. A linear unbalancing rule is used to model the effect on cash flow of early payments. This information is valuable when deciding whether or not to bid a given project, and as a method of estimating the interest cost and net worth associated with a given project schedule and bidding strategy. A computer program for a minicomputer was developed to reduce the effort necessary for using this model, and to allow reader participation during the stages of analysis.
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Ashley et al. (1977) studied this question.
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