What Is Project Cash Flow?
Cash flow is the movement of money in — progress claims and advances — and out — materials, labour and subcontractors — along the project timeline.
Why profitable projects fail
Accounting profit does not pay wages; cash does. A project carrying a 12% margin can still stall because its claims are collected after 60 days while its suppliers demand payment within 30. That gap is a financing requirement to be planned for, not a surprise to be managed by crisis.
Building the forecast
From the expected claim schedule — with retention, the advance and its recovery — set against the commitment schedule — major purchases, wages, subcontractors — you draw the cumulative balance curve. The peak funding requirement then appears: both how large it is and when it falls.
Improving the flow
Practical levers: a reasonable advance payment, a shorter claim cycle, supplier payment terms balanced against your own collection, and scheduling the major purchases after the claims rather than before them wherever possible.
Across several projects at once
The real risk is rarely one project: it is three projects whose funding peaks land in the same month. Consolidating the forecasts at company level turns a surprise into a date you can see coming, and tells you whether to take on a fourth job now or in two months.
Worked example
A six-month project worth SAR 3 million: with 10% retention and collection after 45 days, the peak requirement reaches about SAR 640,000 in the third month — knowing it in advance turned a crisis into a facility arranged calmly.
FAQ
What effect does retention have on cash flow?
Retention at 10% means collecting 90 halalas of every riyal executed until it is released at handover — and its accumulation across parallel projects freezes substantial sums that have to be funded from elsewhere.
How does Etimadco help?
It draws the expected cash flow from your actual claims and commitments and warns you about liquidity gaps weeks ahead, at both project and company level.
Put this to work with Construction Cash Flow
Forecast project liquidity before it surprises you: inflows, outflows and retention on a timeline
Explore Construction Cash Flow