How to prepare a construction cash-flow forecast
A cash-flow forecast shows when money is expected to move. That timing can matter even when the project forecasts a profit.
by Jack Butler-Kettle · About 4 min readShare
Before you start
Gather the opening cash position, expected receipts, payment terms, commitments and programme. Use a consistent forecast period.
Start with the opening cash balance. Add expected receipts and subtract expected payments for each period to calculate the closing balance.
Use realistic payment dates and distinguish confirmed amounts from assumptions. A valuation or invoice does not mean the cash has already arrived.
Step-by-step guide
1. Build the dated receipt and payment forecast
Choose weekly or monthly periods to suit the decisions required. Gather the programme, payment terms, orders, labour forecasts and current account records.
Map expected receipts and payments to their likely dates. State how tax, retention, deposits and financing are treated.
Project cost reporting and cost value reconciliation can connect the cash forecast with the budget, commitments and commercial reports.
2. Test timing assumptions
Allow for the actual application, assessment and payment sequence. Show uncertain receipts separately rather than assuming every submitted amount arrives on time.
Test the effect of a delayed receipt or an earlier supplier payment. A small timing change can create a funding gap even without changing profit.
The payment and notices guide explains why the valuation and payment timetable need separate attention.
3. Reconcile actual cash and compare commercial performance
Reconcile forecast with actual cash
Replace forecast periods with actual receipts and payments as records become available. Explain variances and carry the revised opening balance forward.
Do not leave missed receipts in the past and also forecast them again without reconciling the outstanding balance.
Separate timing changes from changes in total expected cost or value.
Read cash alongside the commercial result
A positive margin does not ensure sufficient cash on each payment date. Likewise, an advance receipt can improve cash without creating profit.
Read the CVR guide for the distinction between value, cost and forecast margin.
Project Partner Retainer can support recurring forecasts and reviews within an agreed monthly scope.
4. Identify and act on forecast shortfalls
Identify whether the cause is ordinary payment timing, missing applications, increased costs or unpaid amounts. Those differences determine what work is needed.
The cash-flow problems guide provides a diagnostic table and next steps. It separates routine QS reporting from payment recovery.
For an existing forecast, identify the period, source records and decisions required when requesting Project cost reporting and cost value reconciliation. A spreadsheet alone does not resolve an underlying funding or payment issue.
Before you finish: Show the lowest forecast balance as well as the closing position. Record assumptions and only treat changes as agreed when they are confirmed.
Worked example
The facts
A fictional project period opens with £20,000. The project team forecasts £60,000 of receipts and £70,000 of payments.
What happens
The forecast closing balance is £20,000 + £60,000 − £70,000 = £10,000.
A £25,000 receipt moves to the next period. Current-period receipts fall to £35,000.
The revised closing balance is £20,000 + £35,000 − £70,000 = negative £15,000.
The team identifies the timing gap before committing the payments and considers appropriate funding or agreed payment arrangements.
What this shows
The delayed receipt changes the period's cash position by £25,000. It does not by itself establish a £25,000 reduction in project profit.
Construction cash-flow forecasting
Use bank cash and expected payment dates, not earned value. Carry each closing balance into the next opening balance and show any funding gap.
Free blank template for your own project. The completed example is shown below. No email address required.
View the completed example
Completed fictional example
Westhaven refurbishment · 14 October 2026 · Version 1.0
Construction cash-flow forecasting
Scroll across if needed to read the whole record. A dash means no value has been entered.
| Period / scenario | Opening cash (£) | Receipts (£) | Payments (£) | Closing cash (£) | Timing / action |
|---|---|---|---|---|---|
| October baseline | £20,000.00 | £60,000.00 | £70,000.00 | £10,000.00 | Includes £25,000 client receipt expected 16 Oct |
| October delayed receipt | £20,000.00 | £35,000.00 | £70,000.00 | -£15,000.00 | £25,000 moves to November; arrange £15,000 funding or reschedule outflows |
| November after delay | -£15,000.00 | £75,000.00 | £50,000.00 | £10,000.00 | Includes delayed £25,000; opening equals October delayed close |
The first two rows are alternative scenarios, not consecutive periods. The November row follows the delayed scenario. Include VAT in cash flows where actually payable or recoverable.