Purpose -A common distraction to contractors is that of cash management, and particularly incoming payments. In the extreme, a failure to manage a project's cash flows may bring about business failure. A contractor's financial viability rests on how actual payments from an owner are received. The purpose of this paper is to present a method for contractors to evaluate the punctuality and fullness of owner payments based on historical behaviour. Design/methodology/approach -Owners are classified according to their late and incomplete payment practices. The payment profile of an owner, in the form of aging payments received based on claims, is used as a basis for the method's development. Regression trees are constructed based on three predictor variables, namely, the average time to payment following a claim, the total amount ending up being paid within a certain period and the level of variability in claim response times. Findings -The method will be of interest to contractors concerned with managing their cash positions, as well as those persons looking at contractor-owner relationships. Practical implications -The method is intended to be used internally within a contractor's organisation to assist in decision making. The method can also be used by subcontractors, suppliers, and consultants. Owners may use the method reflectively to improve their own practices, to save time and cost by reducing disputes, and to develop better owner-contractor relationships. Originality/value -This paper represents an original approach, and an original contribution to contractor pre-tendering risk analysis practices, and an extension to contractor claim-payment analysis.

PurposeSubcontractor payments typically come through the contractor, though there can be exceptions to this, and their timing and quantum can be affected by the upstream payment practices of the owner to the contractor, as well as the payment practices of the contractor. The purpose of this paper is to study the linked effect of late and incomplete payments of both the owner and contractor on what the subcontractor receives.Design/methodology/approachThe paper's analysis develops on an existing Markov chain formulation of owner payments. The probability of getting payment from an owner or contractor is represented as a function of time since claim submission. Such functions are established through goodness of fit tests using actual project data. The downstream progression of payment from owner to contractor to subcontractor is treated as a collection of series and parallel systems, for which the likelihood of payment is assessed.FindingsA model that enables subcontractors to calculate the likelihood of getting their claims paid, based on owner and contractor historical payment practices, is developed. Subcontractors are able to calculate the conditional and unconditional probabilities of their claims being paid at any time after claim submission. The model may be used with historical payment records, or with identified typical owner and contractor payment types.Practical implicationsThe paper presents a practical method by which a subcontractor is able to calculate age‐dependent probabilities of outstanding claim amounts being paid. Such information feeds into the subcontractor's tendering practices before entering a new project, and in the subcontractor's contract administration practices in terms of pursuing claims.Originality/valueThe modelling of the owner‐contractor‐subcontractor payment linkage is original. No similar modelling exists in the literature.

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Contractor's Financial Estimation based on Owner Payment Historiesh a n h t r a n · d a v i d g . c a r m i c h a e l · c o n t r a c t o r 's f i n a n c i a l e s t i m a t i o n b a s e d o n o w n e r … · pp 481 -489 o r g a n i z a t i o n , t e c h n o l o g y a n d m a n a g e m e n t i n c o n s t r u c t i o n · a n i n t e r n a t i o n a l j o u r n a l · 4(2)2012 482