Project Working Capital Requirements
The successful contractor on the project is keen to know what financing requirements are required by way of borrowing to finance the Contract’s working capital.
In a role swap, you are required to determine the working capital requirements from month to month.
Contract Details:
| Retention: | 5% |
| Profit: | 12% included in tender |
| Payment Employer to Main Contractor: | 4 weeks after the valuation date |
| Project Duration: | 15 months |
| Contract Sum: | £6.25million |
| Practical Completion: | 50% retention is released upon completion |
| Liability Period: | 6 months after practical completion, 50% of the remaining retention will be released |
Using Excel Spreadsheet as appropriate, produce a report to the Contractor’s Commercial Director, and your report should include:
- Using the empirical 1/4 – 1/3 S curve, prepare a 3-column table of expenditure on the three sections of project duration.
- Using the table above, draw a continuous smoothed graph approximating the S curve for expenditure.
- From the graph above, by interpolation, prepare a table of monthly valuation for the entire duration of the project
- Calculation of (using a table format) cumulative gross valuation, cumulative net valuation, monthly payment, cumulative cost, monthly cost and negative/positive cash flow.
- Present your report in a Saw tooth diagram (based on cashflow figures obtained) to make it easily readable by Senior Managers. Clearly show the maximum capital borrowing required for the contract.
Requirements: As presented in the requirements 1-4 above
