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An evaluation of contractors’ satisfaction with payment terms influencing construction cash fl ow

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Odeyinka, Henry and Kaka, A (2005) An evaluation of contractors’ satisfaction with payment terms influencing construction cash fl ow. Journal of Financial Management of Property and Construction, 10 (3). pp. 171-180. [Journal article]

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Abstract

Construction cash fl ow models developed in previous researches demonstrated thatcash fl ow profi les vary for differing procurement methods. However, the issue of whethercontractors are satisfi ed or dissatisfi ed with payment terms impacting cash fl ows indiffering procurement methods is yet to be investigated. This is the concern of this study.• The study identifi ed from literature, payment terms potentially thought to impactconstruction cash fl ow. Using a 6-point Likert-type scale, a questionnaire survey wasadministered to UK construction contractors in order to assess their level of satisfactionwith identifi ed payment terms infl uencing construction cash fl ow. Responsesfrom the survey, which focused on traditional and design and build procurement methodswere analysed using mean response analysis and one-way analysis of variance.• Results showed that while contractors were satisfi ed with most of the contractualfactors investigated under both procurement systems, they were dissatisfi ed with two ofthe factors, namely, time lag between entitlement to receive and actually receiving cashpayment and percentage of contract sum retained. This dissatisfaction calls for actionto consider devising alternative means of dealing with retention and delay payments.

Item Type:Journal article
Keywords:cash flow, design and build contract, payment term, traditional procurement
Faculties and Schools:Faculty of Art, Design and the Built Environment
Faculty of Art, Design and the Built Environment > School of the Built Environment
Research Institutes and Groups:Built Environment Research Institute
Built Environment Research Institute > Centre for Sustainable Technologies (CST)
ID Code:10377
Deposited By:Dr Henry Odeyinka
Deposited On:20 May 2010 11:06
Last Modified:20 May 2010 11:06

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