New Insight on Project Cashflow and Forecasting
Dear BIVILLEPM Community,
When you make the forecast of the project expenses with Project Earned Value Analysis, the Project Cashflow Report on the contractor side should be updated with the forecast (Estimate to Complete). At every point in time, we need to have a future spending plan. This important metric should reflect the forecast cash expenses and will surely affect the overall cash flow. Additionally, when you have compensation due to prolongation claims, this inflow should be included in the forecast too.
Periodically, we should know if we are making a profit or not on the project. Technically, this is not regarded as “profits” in accounting terms, but in my opinion, it’s regarded as operating cash flow limited to this project (not portfolios of projects).
Image By #GeorgeNWOGU
When this is amortized by depreciation and loan interest (as tax is already included as outflow), only then can it be considered technically as net profit. From this document, I can get my Projected Revenue and Net Profit Margin as important KPI targets if I have information on the loan interest and all assets owned so that I can amortize for their useful life. Okay, wake up, I’m not doing this! I’m not the CFO/Account Manager. 🤷🏽♂️ Let me stop here. ✊🏻
#ProjectManagement #Cashflow #Forecasting #EarnedValueAnalysis #NetProfitMargin #COO #GeorgeNWOGU #BIZVILLEPM 🌐🚀
Warm regards,
Engr. George (Chìsom) ÑWÒGU (MBA, PMP®️)
Motto: Humanity First, then Smart and Green. 🚀
My name is George Nwogu, a Senior Project & Planning Manager, COO and Global Trainer from Nigeria. I’m the Founder of Bizville Project Management Limited
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