Cash flow and S-curves

Cash flow is the timing of money coming in and going out. A project can be profitable on paper yet fail because money runs out halfway. For an owner, cash flow forecasts show how much funding is needed each month. For a contractor, they show how much working capital must be arranged between paying suppliers and wages and receiving payment for certified work.

Plotting cumulative cost against time usually gives an S-shaped curve: slow at the start during mobilisation and early works, steep in the middle when most trades are working, flattening towards completion as finishing and testing take place. The planned S-curve, drawn from the cost-loaded schedule, is the baseline. Actual cost and earned value curves are drawn on the same axes during the project. The gap between curves shows cost and schedule variance at a glance. Typical S-curve shapes from past projects let planners sanity-check a new schedule.

A contractor's cash position depends on the payment terms: monthly running bills, the certification period, retention money held back (often around 5 percent until defects liability ends), mobilisation advances and their recovery, and price adjustment. Outflows include materials paid on delivery or credit, subcontractors and plant. The cumulative cash curve dips below zero early in the job; the deepest point is the peak working capital requirement, and its cost in interest is a real project cost.