Modelling payment mechanisms for supply chain in construction

Ibrahim Motawa, Ammar Kaka

    Research output: Contribution to journalArticle

    Abstract

    Purpose - Different direct/indirect managerial and contractual links throughout the supply chain have been researched to improve project performance. These links are undoubtedly influencing payment and cash flow mechanisms. As different members of the supply chains are affected differently by the factors influencing cash flow, payment mechanisms have to be designed in such a way that this uneven sensitivity to cash flow factors is addressed and linked to value and utility. The purpose of this paper is to introduce an IT system developed to model different payment mechanisms to enable the supply chain members to decide on the most appropriate payment mechanism. Design/methodology/approach - The adopted methodology to select the appropriate payment mechanism is first illustrated. The mathematical model is then developed. The IT system to automate the developed methodology is then presented. The system considers alternative payment terms and conditions across the supply chain in a transparent and negotiated manner. Findings - The outcome results in designing payment mechanisms and cash flows that satisfy all supply chain members. Originality/value - The value of this research to the construction industry has been the clear identification of the benefit of applying appropriate and innovative payment mechanisms. This will encourage organisations to engage in these mechanisms and hence improve the effectiveness of how projects are managed and executed. © 2009 Emerald Group Publishing Limited.

    Original languageEnglish
    Pages (from-to)325-336
    Number of pages12
    JournalEngineering Construction and Architectural Management
    Volume16
    Issue number4
    DOIs
    Publication statusPublished - 3 Jul 2009

    Fingerprint

    Supply chain
    Payment
    Modeling
    Cash flow
    Methodology
    Construction industry
    Factors
    Design methodology
    Project performance
    Influencing factors
    Mathematical model

    Keywords

    • Cash flow
    • Construction industry
    • Payments
    • Supply chain management

    Cite this

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    title = "Modelling payment mechanisms for supply chain in construction",
    abstract = "Purpose - Different direct/indirect managerial and contractual links throughout the supply chain have been researched to improve project performance. These links are undoubtedly influencing payment and cash flow mechanisms. As different members of the supply chains are affected differently by the factors influencing cash flow, payment mechanisms have to be designed in such a way that this uneven sensitivity to cash flow factors is addressed and linked to value and utility. The purpose of this paper is to introduce an IT system developed to model different payment mechanisms to enable the supply chain members to decide on the most appropriate payment mechanism. Design/methodology/approach - The adopted methodology to select the appropriate payment mechanism is first illustrated. The mathematical model is then developed. The IT system to automate the developed methodology is then presented. The system considers alternative payment terms and conditions across the supply chain in a transparent and negotiated manner. Findings - The outcome results in designing payment mechanisms and cash flows that satisfy all supply chain members. Originality/value - The value of this research to the construction industry has been the clear identification of the benefit of applying appropriate and innovative payment mechanisms. This will encourage organisations to engage in these mechanisms and hence improve the effectiveness of how projects are managed and executed. {\circledC} 2009 Emerald Group Publishing Limited.",
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    Modelling payment mechanisms for supply chain in construction. / Motawa, Ibrahim; Kaka, Ammar.

    In: Engineering Construction and Architectural Management, Vol. 16, No. 4, 03.07.2009, p. 325-336.

    Research output: Contribution to journalArticle

    TY - JOUR

    T1 - Modelling payment mechanisms for supply chain in construction

    AU - Motawa, Ibrahim

    AU - Kaka, Ammar

    PY - 2009/7/3

    Y1 - 2009/7/3

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    AB - Purpose - Different direct/indirect managerial and contractual links throughout the supply chain have been researched to improve project performance. These links are undoubtedly influencing payment and cash flow mechanisms. As different members of the supply chains are affected differently by the factors influencing cash flow, payment mechanisms have to be designed in such a way that this uneven sensitivity to cash flow factors is addressed and linked to value and utility. The purpose of this paper is to introduce an IT system developed to model different payment mechanisms to enable the supply chain members to decide on the most appropriate payment mechanism. Design/methodology/approach - The adopted methodology to select the appropriate payment mechanism is first illustrated. The mathematical model is then developed. The IT system to automate the developed methodology is then presented. The system considers alternative payment terms and conditions across the supply chain in a transparent and negotiated manner. Findings - The outcome results in designing payment mechanisms and cash flows that satisfy all supply chain members. Originality/value - The value of this research to the construction industry has been the clear identification of the benefit of applying appropriate and innovative payment mechanisms. This will encourage organisations to engage in these mechanisms and hence improve the effectiveness of how projects are managed and executed. © 2009 Emerald Group Publishing Limited.

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