Cash Flow in Project Schedule

Alex,
we always manage cash flow in the project/portfolio schedule. Please clarify your question. What problems did you meet?
Best Regards,
Vladimir

Alex

For proposals we create the cash flow. Data is generated by Primavera and exported to Excel for print-out. After a modification of the plan, just run the report again and print.

Hope this helps

Dieter

Cash flow is generated thru the sequencing of activities which are cost loaded with the aid of the Primavera software.

Dear All

Thanks for the info

Cashflow involve both incoming / outgoing of $,

and not always related to the actual activity, like bond payments, deposit...

Also CBS is not always = WBS

How everyone is tackle this issue

Regards

Alex

Dear Alex

Bond payments, contract fees, taxes, deposits (in,out),... are activities - coded as e.g. "financial". They have their own WBS-node.
We have a standard WBS. CBS in general are additional branches to the WBS. Those activities get their own coding --> are not visible in reports. If not possible, then a code can be used for CBS.
I’m looking forward to see different approaches as well.

Regards
Dieter

Alex Wong wrote:

"Cashflow involve both incoming / outgoing of $, and not always related to the actual activity,.."

It’s a bit tangential to this discussion, but it’s interesting to note that for many years (i.e., 70s & early 80s), US Dept. of Defense contractors used to schedule costs and BCWS based on accruals at the time of the activity’s performance, but report ACWP on the basis of disbursement, i.e., when the cheque was cut.

Although there are occasions when costs must be paid in advance of work, most of the time it’s the other way around. The resulting "Disbursement Delay Distortion" led to the CPI looking much better than it should -- until after the project completion, when all the financial chickens would come home to roost as the invoices were paid!

Fraternally in PM,

Steve D.

We enter planned and actual payments as zero duration activities.
We use not CBS but cost components and cost centers (Spider approach). Unit costs for income components are negative. Separate cost centers (groups of cost components) are created for expenses, income, cash flow, etc. Reports can be produced for all cost centers including Cash Flow.
If planned financing is known then Spider Project calculates project schedule taking into account financial constraints.

Hi alex,

Insurance bond - I make sure it is accrued at the start of the project. I allocate it on the start milestone.

downpayment - i ask subcontractors to submit first their own cashflow following the master schedule. Most of the time you will need to introduce some kind of dummy activity to allocate DP. The tricky part here is, you may have to pay DP to your vendor but it does not necessarily part of your contract with the client. In this case, you may have a - cash flow at certain point in the project. This - cash flow will distort the Earned Value Analysis.

I think it’s worthwhile to discuss also time related cost such as Project Management cost, Site Management cost and Office Overhead cost. In this case I also introduce additional activity line item then allocate the cost.

Some of these activities shall be used for internal purposes only, not for clients viewing. Please note that at the start of the project, these allocations are just estimated allocation. You may need to tweak a little bit as you progress with the work.

On the issue of ACWP(AV) as mentioned by Steven. You have to distinguished actual cost you billed from client and actual cost you actually paid to a vendor. This is quite tricky specially when you compare EV with AV. You may have earned 30% already in end of March but the actual 30% costs may only be realized on the following month or more. Vendors could have received their money already, but you haven’t got the money from the client yet.

In my experience, it’s all about communicating clearly to all stakeholders what it is that we’re talking about. Earned Value Analysis is a good tool, but it has many weaknesses. The good news is, with clear communication and a lot of common sense, it can be done.

I hope this helps.

Dear All,

It is good to see most planner integrate both CBS with WBS and that make cost reporting through project schedule is possible.

I like to see any other approach that you might come across.

Regards

Alex

Alex,
do you ask about cost reporting or cash flow management?
I suggest you to clarify your questions. Now they are too broad.
Regards,
Vladimir

we used before P3 to perform cash flow management, with the same schedule, we make another copy loaded with the prices ( the contract used to be unit price based)

then we export the two schedule to excel, the expected profit by month is ( of course) invoice - cost .( invoice = quantity realized X prices for each activity )

i imagine the case for lump sum is even easier, as the invoice is physical progress X value of contract ( so no need to make another schedule)

just one thing, i think CBS is not supposed to be the same as WBS? ! as wbs is project specific, but CBS coding and structure is standardized by law( PCN in algeria), at least the first level.

for example cost account 61.XX.XX represent material ( gravel, cement ....)

really an interesting subject ;)

regards

mimoune

edit : i am speaking about financial accounting here; sorry for the noise