The relationship between construction scheduling and cash flow in the construction of infrastructure projects

1 Introduction

Construction project performance depends on the complex interplay among scope, schedule, budget, and quality (e.g., Abdullahi and Tembo, 2023; Jane, 2025; Szwarcfiter et al., 2023). Within this framework, construction scheduling and cash flow management are closely interrelated, as activity sequencing, resource allocation, and contractual payment mechanisms collectively determine project liquidity and financial stability. Misalignment between expenditures and certified payments may result in liquidity shortages, financing requirements, schedule delays, and increased contractual risk.

Although considerable research has focused on construction cash flow forecasting, most existing approaches are model-driven, relying on mathematical and statistical techniques that treat the construction schedule as a static input. Consequently, limited attention has been given to how alternative scheduling strategies, including changes in activity sequencing, procurement timing, and resource allocation, influence cash flow behaviour and project financial performance.

To address this gap, the present study adopts a schedule-oriented, scenario-based approach to investigate the interaction between construction scheduling and contractor cash flow. Specifically, it addresses three research questions:

• (RQ1) How do alternative construction scheduling strategies influence contractor cash flow behavior?
• (RQ2) Which scheduling strategy provides the most favorable balance between liquidity, financing requirements, and financial risk?
• (RQ3) To what extent does synchronizing construction progress with cash flow improve financial resilience in railway infrastructure projects executed under FIDIC Red Book contracts?

These questions establish the analytical framework and distinguish this research from conventional cash flow forecasting studies by focusing on the financial implications of alternative scheduling strategies.

The research examines a section of the Railway Corridor X project between Fushë Kosovë and Mitrovica, a strategically important transport infrastructure corridor. The main characteristics of the analyzed railway section are presented in Table 1. Three construction scheduling scenarios are evaluated to assess their effects on cash flow behaviour, contractor liquidity, financing requirements, and financial resilience. The comparative analysis demonstrates how scheduling decisions influence not only project delivery but also financial performance and risk allocation, providing a practical framework for integrating schedule optimization with financial planning in linear infrastructure projects.

TABLE 1. Details of the railway sector phase II - Corridor X.

The relevance of this research has increased with the recent expansion of transport infrastructure investment across Europe. Investments in sustainable mobility and trans-European transport networks have intensified the need for integrated schedule–cash flow management as projects become larger and financially more complex (European Commission Transport Investment Report, 2024/2025). Consequently, effective alignment between construction progress and financial planning has become increasingly important for maintaining liquidity, controlling financing requirements, and reducing project risk.

2 Literature review

Construction schedules and cash flows are widely recognized as interdependent components of project management, with activity sequencing, resource allocation, procurement timing, and payment certification jointly determining expenditure patterns and contractor liquidity. On the other hand, financial limitations reduce production capacity, slow procurement, and hinder resource mobilization, often leading to a cycle of schedule delays and cash flow shortages. Recent studies now support combining schedule optimization with cash flow management instead of handling them separately (Kenley, 1999; Elazouni and Metwally, 2005; Khosrowshahi and Kaka, 2007; Al-Shihabi and Elazouni, 2025).

Although deterministic S-curve models remain widely adopted because of their simplicity and compatibility with contractual valuation procedures, they inadequately capture uncertainties arising from design changes, productivity variability, procurement delays, inflation, and contractual modifications.

Accordingly, while the Royal Institution of Chartered Surveyors (RICS, 2024) continues to recommend cost-loaded schedules and programme-based valuation methods for project control, recent research has increasingly adopted parametric, heuristic, finance-based, and component-based forecasting models that incorporate project-specific characteristics and financial constraints into prediction algorithms (Assaf et al., 2022). The parametric heuristic framework developed by Msawil et al. (2021) improves forecasting by modeling project expenditure behavior, whereas finance-based scheduling simultaneously optimizes project duration, financing costs, contractor liquidity, and working capital requirements (Al-Shihabi and Elazouni, 2025). Component-based approaches further enhance prediction reliability by modeling labor, materials, equipment, subcontractors, and indirect costs separately, thereby reflecting the distinct temporal and risk characteristics of each cost category.

Digitalization has further transformed construction cash flow forecasting through the integration of cost-loaded schedules, real-time progress monitoring, financial analytics, enterprise resource planning, and BIM-enabled project management platforms (Forbes and Riso, 2024). These technologies enable continuous updating of expenditure forecasts, real-time variance analysis, and proactive identification of liquidity risks, supporting more responsive financial decision-making throughout project delivery.

Overall, the reviewed approaches demonstrate complementary strengths and limitations. Deterministic models remain attractive because of their simplicity and contractual acceptance but are less effective under uncertain project conditions. Parametric and finance-based models improve predictive capability by incorporating project-specific characteristics and financial constraints. At the same time, digital and BIM-enabled approaches support continuous monitoring and scenario analysis through integrated project management platforms.

However, most existing research focuses on improving forecasting accuracy rather than assessing how different scheduling strategies affect contractors' liquidity and financial resilience. This limitation is particularly evident in large linear infrastructure projects delivered under FIDIC Red Book contracts, where payments depend on certified physical progress (Elazouni and Metwally, 2005; Khosrowshahi and Kaka, 2007; Liu and Wang, 2008). Table 1 contains a review of cash flow forecasting models. As a result, the scenario-based framework enhances current forecasting methods by examining how construction programme performance directly influences cash flow patterns, filling a vital gap in construction financial management.

3 Case study

3.1 Introduction to the case study project

Kosovo is modernizing the Railway Route Corridor X with European loans and grants. This corridor runs from the border with North Macedonia to the border with Serbia, spanning 145 km in Kosovo (see Figure 1). The project complies with international procurement regulations. It is managed via FIDIC contracts, specifically the 2017 FIDIC Red Book, “Conditions of Contract for Construction of Buildings and Engineering Works Designed by the Employer–General Conditions.” This study presents a cash flow analysis using a standard S-curve across three scenarios, integrated with project schedules in Gantt charts to predict cash flow trends. These scenarios are then compared to the initial cash flow projections submitted by contractors for approval by the Contracting Authorities.

The planned completion time for a 34.4 km segment was 18 months. The S-curve cash flow forecast for this segment was created by the Contractor, approved by both the Client and the Engineer, and then became part of the contract. This forecast was a binding document that obligated the Contractor to execute the work and the Client to adhere to the payment schedule. Details of the Kosovo Railway Corridor X, especially Phase II, are shown in Figure 1 and in Table 2.

TABLE 3. Comparative financial performance of the three construction cash flow scenarios.

The steps taken before creating the project schedule were as follows:

• Developing a Work Breakdown Structure, where the tasks were divided into four categories and then into specific activities:
• Procurement Works (approximately 45% of the total cost) – procurement of Rails, Ballast, Sleepers, and Turnouts.
• Substructure and Drainage Works (about 22% of the total cost) – Earthworks and drainage network construction.
• Structure Works (approximately 17% of the total cost) – Construction of culverts, bridges, platforms, and underpasses.
• Superstructure Works (approximately 11% of the total cost) – Installation of sleepers, ballast, rails, and turnouts.
• Contingencies (approximately 5% of the total cost)
• Estimating and assessing the resources required for each activity, including time, materials, labor, and total costs. This was based on standard cost and productivity norms, as well as the prior experience of the project manager’s team.
• Analyzing the relationships and constraints between activities, which influence the overall workflow during on-site execution.

3.2 Scheduling scenarios

Construction scheduling and cash flow distribution are key determinants of project financial performance. In railway infrastructure projects, major procurement items such as rails, sleepers, ballast, and turnouts account for a substantial proportion of total project costs. Consequently, contracts commonly provide advance payments of up to 40% to support material procurement, compared with 5%–10% for most conventional infrastructure projects. While advance payments influence cash flow distribution, they do not alter the construction schedule.

The three scheduling scenarios were developed using the approved baseline program, certified payment records, and project scheduling practices observed during execution. The benchmark scenario represents the contract-approved program; the delayed scenario reflects realistic disruptions that affect progress and cash flow; and the front-loaded scenario simulates accelerated procurement to improve short-term contractor liquidity. Developed from a common project database and contractual framework, the scenarios provide a consistent, reproducible basis for evaluating the effects of alternative scheduling strategies on cash flow. They can be readily applied to other infrastructure projects using cost-loaded schedules and progress-based payment mechanisms.

3.2.1 Scenario 1 – progress-based (benchmark) cash flow schedule

The Base Schedule represents the contractor’s proposed plan, aligning procurement with on-site installation needs. (See yellow bars in Figure 2 below as the Base Schedule.).

Procurement of rails, sleepers, and ballast was scheduled to commence in the latter part of the second quarter of the project timeline. This method ensures steady financial flow and aligns cash flow with actual progress. (See the black cash flow curve in Figure 3 for the Base Schedule.).

• Non-Optimal Linear Cash Flow Schedule

In this scenario, procurement begins at project inception and continues over an extended period, resulting in a linear cash flow profile, as shown in Figures 3, 7. Although this method can help achieve early profits and reduce short-term financial risk, it also entails several financial and operational inefficiencies. A steady cash flow does not match the timing of project activities. Overfunding occurs in the early phases, when construction activity is low, whereas underfunding may occur during peak execution periods. This mismatch reduces cash flow efficiency and increases reliance on external financing, thereby raising interest costs.

The linear spending pattern also limits the capacity to manage project uncertainties, such as price increases, schedule delays, and adverse weather. This cuts down financial flexibility and limits opportunities for procurement optimization. Additionally, a linear cash flow can give a misleading picture of project progress because it does not reflect the non-linear nature of construction work.

These issues can put additional financial strain on the contractor and increase the risk of cost overruns. For the client, releasing large sums early adds risk because the contractor might withdraw, leaving insufficient resources to find a replacement if needed (Elazouni and Metwally, 2005).

When choosing a non-optimal planning approach, contractors need to assess their ability to cover upfront costs, ensure supply chain stability, and properly store materials to prevent spoilage before use.

3.2.2 Scenario 2 – delay-induced cash flow schedule

One of the most common problems in construction projects is delays. However, how do they affect a project’s financial performance? Delays can vary in nature, but fundamentally, they fall into the following two categories (see Table 3 for details):

• Unforeseeable Delays–delays that cannot possibly be predicted in the planning stage,
• Foreseeable delays–delays that should be noted and considered during the planning stage, within the duration of each activity, as per their possibility of occurring.

TABLE 2. Unforeseeable and Foreseeable delays in railway construction.

The delays considered in this scenario are only foreseeable; unforeseeable delays cannot be attributed to poor planning. These delays are thought to occur during most activities at the start of the project, creating a domino effect that delays subsequent activities (with longer durations) and ultimately prevents the project from being completed on time. The Gantt Charts and cash flows for the base and delayed schedules are presented in Figures 4, 5.

• ii. Delayed cash flow schedule

Construction delays affect financial stability throughout the project lifecycle. However, their most significant impact is the risk to timely project completion. Under a suboptimal linear cash flow schedule, financial exposure intensifies as early capital allocation and limited liquidity reduce the contractor’s capacity to absorb disruptions. If the contract is not terminated, the client may claim damages for delay. In accordance with the FIDIC Red Book, such damages may amount to 10% of the total contract value, potentially placing the contractor in a financially unsustainable position.

By contrast, an optimal cash flow schedule aligned with the actual progression of construction activities improves resilience to delays by concentrating expenditures during peak productivity periods. Financing costs are thereby reduced, liquidity is preserved, and greater flexibility is retained for implementing recovery measures.

Although delayed recovery is inherently complex, its effectiveness is strongly influenced by the cash flow structure adopted. Under an optimal schedule, mitigation measures such as schedule revision, targeted resource intensification, and acceleration of critical activities can be implemented more efficiently. In the railway construction case study, emphasis is placed on expediting structural works that disrupt alignment continuity to enable the timely installation of the superstructure.

Enhanced coordination between site and office teams, supported by frequent progress monitoring, is essential to recovery efforts. Contingency recovery strategies should also be developed to address potential failure of primary measures. Where appropriate, negotiations for an extension of time may be initiated. Increased focus on quality control is required to avoid rework, which could further exacerbate delays (Gashi, 2018; Gashi, 2024). In cases of severe disruption, engaging external experts may be necessary.

3.2.3 Scenario 3 – Front-Loaded Cash Flow Schedule

Front-loading is a strategy used by some project managers in which the primary project costs are incurred early. In this case study, it involves the full procurement and storage of key materials such as rails, ballast, sleepers, and turnouts at the project’s start, well before they are needed for installation on site. The Gantt Charts and cash flows for the front-loaded and base schedules are presented in Figures 6, 7.

• iii. Front-Loaded Cash Flow Schedule

Front-loaded cash flow scheduling is typically used in specific construction projects to enhance early-stage contractor liquidity; however, this approach generally entails greater financial and managerial risks. In an up-front-loaded schedule, a significantly larger share of project expenditures is assigned to the early phases, creating a gap between cumulative cash flow and actual physical progress. Consequently, interim payment profiles may no longer accurately represent the work completed.

From the owner’s perspective, risk exposure increases due to a potential mismatch between payments made and the remaining work. If the contractor fails to perform or withdraws, the remaining contract value might be insufficient to finish the project without additional funds. Additionally, early overcompensation can weaken performance incentives and has been linked to lower quality compliance. In several regulatory environments, deliberately front-loading payment schedules may also raise contractual or legal concerns (Lokmic and Smith, 2000).

4 Significant findings

The comparative analysis demonstrates that the alignment between construction progress and cash flow is a critical determinant of project liquidity, financial stability, and schedule resilience. Although the three scenarios are based on an identical construction program, variations in the timing of cash disbursement produced substantially different financial outcomes, highlighting that cash flow distribution is as important as the overall project budget.

Table 3 summarizes the comparative financial performance of the three scenarios using key project management indicators. The benchmark scenario consistently delivered the most favorable performance by maintaining high liquidity stability, low financing requirements, and a balanced allocation of financial risk. In contrast, the delayed scenario increased financing requirements and contractor financial exposure because project expenditures continued while progress payments were deferred. Although the front-loaded scenario improved early contractor liquidity, it shifted greater financial risk to the client by advancing payments ahead of physical progress.

Overall, the results demonstrate that synchronizing cash flow with construction progress provides the most effective balance among liquidity management, financial efficiency, and contractual risk. The results are particularly relevant for railway infrastructure projects, where sequential construction activities, high procurement costs, and milestone-based payments increase exposure to temporary liquidity shortages. Under FIDIC Red Book contracts, close synchronization between project progress and cash flow is therefore essential to maintaining contractor solvency and reducing contractual risk.

From the client’s perspective, schedules aligned with actual construction progress improve budget predictability and payment transparency while reducing the risk of financing work that has not yet been physically completed. Consequently, synchronized schedule–cash flow management benefits both contracting parties through improved financial control and more balanced risk allocation.

5 Discussion and implications

The findings demonstrate that construction scheduling and cash flow should be managed as an integrated project control system rather than as separate operational and financial functions. Consistent with finance-based scheduling research (Elazouni and Metwally, 2005; Khosrowshahi and Kaka, 2007), contractor liquidity depends not only on project cost but also on the synchronization of financial disbursement with physical progress. The results further support recent advances in adaptive cash-flow forecasting, schedule-performance analytics, and digital project management (Msawil et al., 2021; Lagos et al., 2024; RICS, 2024; Forbes and Riso, 2024), extending existing knowledge by demonstrating how alternative scheduling strategies influence financial resilience in railway infrastructure projects.

The comparative evaluation of the benchmark, delayed, and front-loaded scenarios directly addresses the study objectives by demonstrating that construction scheduling strategies generate substantially different cash-flow profiles and financial outcomes. Although all scenarios were developed from the same construction programme and contractual framework, variations in payment timing produced distinct liquidity conditions, financing requirements, and risk distributions. The benchmark scenario achieved the most balanced financial performance by maintaining stable liquidity and minimizing financing needs, whereas the delayed scenario increased contractor financial exposure through prolonged cash deficits. On the other hand, the front-loaded scenario enhanced short-term contractor liquidity but increased financial risk for the client by making payments in advance of physical progress. These findings confirm that synchronizing construction progress with financial disbursement enhances project financial resilience under FIDIC Red Book contracts and establish schedule–cash-flow integration as a key mechanism for improving project financial performance.

From a practical perspective, the proposed framework provides decision support for contractors, clients, and funding agencies in designing payment strategies that improve liquidity, optimize financing requirements, and reduce contractual risk. The findings also reinforce the growing role of 5D BIM, Digital Twins, and integrated project control platforms, where synchronized schedule, cost, and financial data enable proactive decision-making and continuous assessment of project financial resilience throughout the project lifecycle.

6 Conclusion

This study developed a comparative analytical framework to evaluate the impact of alternative construction scheduling strategies on contractor cash flow and financial resilience in railway infrastructure projects. The findings demonstrate that aligning financial disbursement with construction progress is fundamental to maintaining liquidity, strengthening financial stability, and improving project resilience.

Among the evaluated scenarios, the progress-based approach achieved the most balanced financial performance by maintaining stable liquidity and minimizing financing requirements. In contrast, delayed payment strategies increased contractor financial exposure, whereas front-loaded payments improved short-term liquidity at the expense of greater client financial risk. These results confirm that project financial performance depends not only on funding availability but also on the synchronization of cash flow with construction progress.

The proposed framework extends finance-based scheduling research by demonstrating that the interaction between construction programme performance and cash flow provides a practical indicator of financial resilience. It also offers a decision-support tool for contractors, clients, and funding agencies to develop payment strategies that improve liquidity, optimize financial performance, and reduce contractual risk, particularly under progress-based contracts such as the FIDIC Red Book.

The analysis is limited to a single railway infrastructure project delivered under FIDIC Red Book conditions; therefore, broader validation across infrastructure sectors, procurement strategies, and contractual environments is required. Future research should extend the framework by incorporating probabilistic risk analysis, 5D BIM (Ranjbar et al., 2021), Digital Twins, and artificial intelligence further to strengthen integrated schedule–cash-flow optimization and financial decision-making.

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Footnotes

Edited by: Godslove Ampratwum, Western Sydney University, Australia

Reviewed by: Emmanuel Omopariola, University of Cape Town, South Africa