00391009

Component

http://onlinepubs.trb.org...s/trr/1984/955/955-004.pdf

http://scholar.google.com...llen&publication_year=1984

The research on forecasting techniques for payments on current and proposed construction contracts reported in this paper was performed as part of a study to develop a system for generating a 1-to-2-year forecast of monthly cash flows for the Virginia Department of Highways and Transportation. The study revealed that presently used cash flow forecasting methods consistently underestimate ending cash balances. In addition, it showed that the behavior of individual contracts varies widely, with the percent paid out at the halfway point in the schedule ranging from zero to 93 percent. Furthermore, contractors' schedules, on which current forecasts are based, are not reliable indicators of contract duration, payout patterns, or final cost. By the end of the scheduled duration (contractual time limit not allowing for shutdowns) contracts are typically less than 70 percent complete. Cost overruns average 7.8 percent of the contract amount. Seasonality is a critical determinant of construction payout, as is exhibited by the fact that payouts can be six times as high in September as in January. A simple technique that emphasizes the effects of seasonality on payout and realistic estimates of contract duration explained more than 93 percent of the variation in a retrospective test of a sample data base. The accuracy of the forecasting method in actual use will depend on the variability of the weather and on the prompt entry of information on contracts let and scheduled advertisement dates into the forecasting data base. (Author)

Publication of this paper sponsored by Committee on Transportation Programming, Planning, and Systems Evaluation. Distribution, posting, or copying of this PDF is strictly prohibited without written permission of the Transportation Research Board of the National Academy of Sciences. Unless otherwise indicated, all materials in this PDF are copyrighted by the National Academy of Sciences. Copyright © National Academy of Sciences. All rights reserved.

00395848

pp 26-35

1984

Transportation Research Record

Digital/other

Figures (7) ; Tables (9)

Accuracy; Cash flow; Contracts; Cost overruns; Forecasting; Payment; Seasons; Weather

Seasonal variations

Administration and Management; Finance; Highways; Planning and Forecasting; I10: Economics and Administration

TRIS, TRB

Dec 30 1984 12:00AM

• APPLICATION OF THE HIGHWAY CONDITION PROJECTION MODEL TO INTERSTATE 4-R REPAIR
• DEVELOPMENT OF PENNSYLVANIA'S AGRICULTURAL ACCESS NETWORK
• PENNSYLVANIA PRIORITY COMMERCIAL NETWORK: DEVELOPMENT AND APPLICATIONS
• SELF-ADMINISTERED MAILBACK HOUSEHOLD TRAVEL SURVEY
• SETTING PRIORITIES OF HIGHWAY PROJECTS BY SUCCESSIVE SUBSETTING TECHNIQUE
• TRANSPORTATION IMPROVEMENT PROGRAM FOR NORTHEASTERN ILLINOIS
• USE-RELATED VEHICLE DEPRECIATION