A conceptual framework for assessing risk impacts on clients' cash flow

The need for a reliable prediction of client’s cash flow cannot be overemphasized. Undoubtedly, a prior knowledge of project cash flow requirements helps the client to anticipate his likely future financial commitments and to pro-actively plan for them as well. Different researchers have made efforts to provide simpler and quicker techniques to assist both the client and contractors in forecasting their cash flow. However, risk in construction has been identified as one of the inhibiting factors in achieving the desired level of accuracy of contractor’s and client’s cash flow forecast. This paper presents part of an on-going research aimed at assessing the impacts of risk on construction clients’ cash flow forecast. Based on a review of risk and cash flow management theoretical concepts as well as empirical evidences from previous studies, this paper attempts to develop a conceptual framework for assessing the impacts of risk on construction clients’ cash flow forecast. It is the intention that the conceptual framework will assist in developing a model which considers risk factors in forecasting clients’ cash flow. It is expected that the outcome of the research will provide a more reliable prediction of client’s cash flow as likely changes to client’s cash flow pattern due to risk occurrence are expected to be evident from the eventual model envisaged in the research.