Use this URL to cite or link to this record in EThOS: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.445394
Title: A decision aid model for the selection of appropriate payment and pricing systems for construction projects
Author: Elsherif, Elhadi Mohamed
ISNI:       0000 0001 3446 9681
Awarding Body: Heriot-Watt University
Current Institution: Heriot-Watt University
Date of Award: 2007
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Abstract:
Construction contracts are fundamental to any project, and the selection of an appropriate payment system is vital given that the ultimate success of any construction project depends on the suitability of the selected payment system to the project's characteristics and client's requirements. The choice of a payment system for construction work is one of the many important decisions that construction clients have to make. In this research, the author has defined the payment system in terms of four layers: payment mechanism, pricing system, payment chain (who pays who), and project cash flow. In order to develop a tool that will help the project managers to select an appropriate payment system, a list of factors that influence the selection process was identified. The most influential factors were identified using a UX based nation-wide postal survey. There are several existing methods for pricing and payment. This research focuses on lump sum, unit rates and cost plus for pricing methods and lump sum payment, interim measurements and milestones for payment methods. As a result of the first survey, several factors were identified to influence the choice of the payment system. A second survey was undertaken to determine the extent of suitability of each payment system to these factors. The multi-attribute utility technology was applied to provide a spreadsheet model to assess the relative importance weightings of the payment system selection criteria and derive utility values. This technology has been successfully applied in construction research and in particular to aid the selection of the procurement system. The model developed in this research will act as a decision aid tool that will assist Industry practitioners to select the most appropriate payment system for a given set of Project requirements and characteristics. The cashflow of the construction project is one of the most important factors that could affect the profitability and survival of construction organisations. Research into cash flow has, in the main, concentrated on two main processes: how to forecast cash flow, and how to manage cash flow. The construction industry has applied many alternative Payment methods and pricing systems. Research into cashflow forecasting has focused on what is referred to as the traditional payment system. This is where prices are based on unit cost and payments on interim monthly measurements. Alternative payment systems, such as stage payments, and milestone payments have not been fully embedded into cashflow forecasting models. Therefore, a new cashflow forecasting model was developed in this research. The main objective of the model is to enable project teams to assess the impact of selecting alternative payment and pricing systems on cashflow. The model is also intended to enable the user to simulate the contract conditions such as the advance payment, retention money, and advance purchases of materials. This will enable project teams to fine tune contract conditions to achieve a favourable and fair cashflow profile for all. The model was developed on a spreadsheet and acted as a simulator of the project cashflow. It was also developed to be accurate and simple to provide the client, the contractor and subcontractors with financial positions during the project period.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.445394  DOI: Not available
Keywords: construction project ; contract conditions ; forecasting ; payment ; pricing ; project team ; selection criteria ; unit rates ; client ; contractor ; project manager ; subcontractor
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