What is a Cash Flow Projection?

A Cash Flow Projection in the construction industry is a financial document that estimates income and expenditure of a project over a specific period of time. This projection tool helps construction managers to anticipate revenues, costs and possible shortfalls. This anticipation is crucial for construction projects, which can be resource-intensive and cost-laden with potentially varying income streams, especially in long-term projects. Utilizing a cash flow projection enables the company to plan and budget funds accordingly. It helps to forecast financial needs, spot potential financing gaps, manage resources efficiently and ensures continuous operations to meet project deadlines. The projection contributes in making informed decisions regarding purchasing materials, subcontracting labor, and managing other direct and indirect costs. Accuracy in these projections can make a significant difference in profitability and sustainability of a construction business.