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Construction Cash Flow Risk Index

by 1,2, 1,2 and 1,2,*
1
Civil Engineering Department, American University of Sharjah, Sharjah 26666, United Arab Emirates
2
Industrial Engineering Department, American University of Sharjah, Sharjah 26666, United Arab Emirates
*
Author to whom correspondence should be addressed.
Academic Editor: Abderrahim Taamouti
J. Risk Financial Manag. 2021, 14(6), 269; https://doi.org/10.3390/jrfm14060269
Received: 30 March 2021 / Revised: 23 May 2021 / Accepted: 1 June 2021 / Published: 13 June 2021
(This article belongs to the Section Risk)
As investment increases in capital projects, financial risks increase, and cash flow prediction and control become more paramount. Higher risks could hinder project performance and increase the chances of failure in multiple aspects of a project. While there are models that aim to assess and forecast risks in the construction industry, none present a technique to include the impact of risks on a project’s cash flow. Therefore, cash flow forecasts tend to exceed the actual cash flow of a project due to inaccurate risk assessment. Thus, this paper presents the Cash Flow Risk Index (CFRI) development process quantifying the impact of risks on a project’s cash flow from an owner’s perspective. To that end, the study explored the literature to identify the risk factors that might impact a construction projects’ cash flow and uncovered 44 factors. The study also validated and consolidated these factors to build a CFRI via a Delphi exercise, which reduced the factors from 44 to 36. In further iterations, the 36 factors were also shared with 32 construction industry professionals to rate their relative importance on a five-point Likert scale, from which relative importance index and weights were obtained. As a result, the CFRI was developed to measure the impact of different risk factors on a typical construction project’s cash flow. View Full-Text
Keywords: construction risks; Cash Flow Risk Index; Relative Importance Index construction risks; Cash Flow Risk Index; Relative Importance Index
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MDPI and ACS Style

Mahmoud, H.; Ahmed, V.; Beheiry, S. Construction Cash Flow Risk Index. J. Risk Financial Manag. 2021, 14, 269. https://doi.org/10.3390/jrfm14060269

AMA Style

Mahmoud H, Ahmed V, Beheiry S. Construction Cash Flow Risk Index. Journal of Risk and Financial Management. 2021; 14(6):269. https://doi.org/10.3390/jrfm14060269

Chicago/Turabian Style

Mahmoud, Hasan, Vian Ahmed, and Salwa Beheiry. 2021. "Construction Cash Flow Risk Index" Journal of Risk and Financial Management 14, no. 6: 269. https://doi.org/10.3390/jrfm14060269

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