A linear programming model for cash flow management in the Brazilian construction industry

Paulo Barbosa and Priscilla Pimentel

Construction Management and Economics, 2001, vol. 19, issue 5, 469-479

Abstract: A linear programming model has been developed for optimal cash flow management addressing specific cash flow issues related to the construction industry. These include typical financial transactions, possible delays on payments, use of available credit lines, effect of changing interest rates, and budget constraints that often occur in the construction industry. A small size project from the Brazilian construction industry is provided as a case study, aiming at evaluating the potential benefits from using the model. Different changes to the basic structure of the model allow and establish the consistency of the results. Alternative formulations are suggested to deal with uncertainties, longer planning horizons, and multiple subcontractors and suppliers. In addition to the tangible financial earnings derived from the optimization process, the simple structure of the model, as a network flow and corresponding equations, provides much visual insight concerning the relationships between the external inputs and the variables of the problem. Optimal results have yet to be achieved in a real life situation, but a better view of whole cash flow management is provided when using the model.

Keywords: Cash flow management; financial planning; linear optimization (search for similar items in EconPapers)
Date: 2001
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/01446193.2001.9709623 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:conmgt:v:19:y:2001:i:5:p:469-479

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RCME20

DOI: 10.1080/01446193.2001.9709623

Access Statistics for this article

Construction Management and Economics is currently edited by Will Hughes

More articles in Construction Management and Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().