![]() ![]() On a construction project, the gap between invoices and payments is expected to be wider due to industry-specific factors like retainage, since that money is withheld until a future date. White Space Between Black & Green: Cost the company is carrying Red Line: Actual job cost spending trend lineīlack Line: Contractor invoices submitted (flat line indicates no invoice was sent) Here is an example of an S-curve showing a month-over-month view of project costs, billings, and receipts on a construction project: If you want to see other uses in action, check out this YouTube tutorial on building an S-curve to model cash flow forecasts from Spencer Burton, a real estate investment director in Dallas, TX. In this article, we are exploring the use of an S-curve to analyze project cash flow, but this framework can actually be used to visualize almost any aspect of a construction project. This model can track and compare specific metrics over time, like production progress against the planned schedule, actual versus budgeted costs, or costs against project progress.Ī cash flow S-curve will show the timing and movement of cash as the project progresses with the actual timing when payment is due. ![]() The reason this graph is called an S-curve is because projects start slowly, ramp up during project delivery in the middle, then slowly end as the project closes out, forming the “S” shape. Tracking project performance over time visually can be solved in the form of a line graph with an S-curve.Īn S-curve is a simple yet versatile data visualization which shows the progression of a construction project in any time interval: daily, weekly, or monthly. Having a visual representation of the job costs and AR invoicing can help you do exactly that, enabling stakeholders to make better and faster decisions. To prevent the situation from getting out of hand, it’s important to be aware of such delays, and respond to them, as quickly as possible. The S-curve: Visualizing project cash flow for faster decision-making While they have a structured and sizable back office, they often find that lack of cross-department communication can cause delays and inefficiencies in areas such as change orders, billing, and collections. In the case of larger contractors, challenges may arise from precisely the opposite situation. Smaller contractors in particular are often led by owners and managers with a limited background in accounting, and a small accounting team. Internal controls and timely communication between project management and accounting are just as important. Having the right internal infrastructure to properly manage cash flow and billing isn’t limited to the systems that produce the information. Use S-curve models to put construction cash flow to the testĬommunication problems hinder cash flow management.3 cash flow lessons in S-curve modeling.Example of S-curve for project cash flow. ![]()
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