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Cheetham, D W, Kaka, A P and Humphreys, G (1997) Development and implementation of a system of financial planning and control for a medium sized building contractor. Journal of Financial Management of Property and Construction, 2(01), 5–34.
- Type: Journal Article
- Keywords: cash flow; contract performance; financial planning; insolvency; turnover
- ISBN/ISSN: 1366-4387
- URL: http://www.emeraldinsight.com/journals.htm?issn=1366-4387
Previous research had established that formalised financial accounting procedures and financial planning techniques are mainly used by the larger building companies. This suggested that a system of financial planning appropriate for a medium sized building company should be devised. This paper describes the development of such a system and evaluates its introduction to a medium sized contracting firm. The system was developed by extending existing recording procedures to forecast turnover required to support overhead charges and to review financial performance for individual contracts. Turnover forecasts can be revised at monthly intervals as valuations occur,- examples of the management decisions that can be aided by such financial information and supplementary reports are provided. The paper demonstrates how the "paper based" system can be implemented to improve the financial control of moderately sized firms. Proposals to further improve the speed of data processing by automating the system using computer software could unfortunately not be implemented because the firm ceased to trade. The proposed system clearly demonstrated to the company the value of the work that was needed to be won in a highly competitive market. Essential information that would have been useful if the system had been applied a few months earlier.