Net cashflow models: Are they reliable?

This paper discusses the development of a reliable net cashflow model to be used by contractors at the tendering stage. The model is based on cost commitment curves instead of the usual value curves. As the model includes many simplified assumptions, there was a need to test its reliability. The model was tested on five building projects and produced good results. The possibility of building an ideal cost curve was examined by building an average curve from the available projects. The average curve was used to forecast net cash flows for the five projects. The results demonstrated the validity of the model as a forecasting tool.