Development of transparent payment systems

Ibrahim Motawa, Ammar Kaka, Chee Hong Wong

Research output: Contribution to journalArticle

Abstract

Purpose Several types of pricing and payment systems are used in the construction industry. However, the current practice is failing to utilise the potential of a link between project performance and clients' satisfaction on one hand and stakeholders' cash flow on the other. Therefore, a paradigm shift in cash flow research is both timely and necessary. The purpose of this paper is to promote and facilitate the use of appropriate payment systems that satisfy all project members. Design/methodology/approach The research first investigates how payment systems are being selected, and the drivers for selecting innovative payment systems. A simulation and selection IT system is then developed that can be used to facilitate project stakeholders' satisfaction by selecting the most appropriate payment system for each project member. The proposed system considers alternative payment terms and conditions across the supply chain and in a transparent and negotiated manner. Findings The outcome should result in planning cash flows that satisfy all team members. The planned cash flow profiles are then used to monitor the implementation of the agreed payment system. Originality/value The main conclusion of the paper is that appropriate payment systems can act as a performance enabler and the provision of the simulation tool would result in project teams taking a more conscious and rational decision in selecting or designing these systems.
Original languageEnglish
Pages (from-to)143-156
Number of pages14
JournalJournal of Financial Management of Property and Construction
Volume13
Issue number2
DOIs
Publication statusPublished - 22 Aug 2008

Keywords

  • cash flow
  • construction industry
  • contracts
  • payments
  • project management
  • United Kingdom

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