Author

Venkateswaran

Date of Award

12-2002

Degree Name

Master of Science

Department

Civil and Construction Engineering

First Advisor

Dr. Jawahar Nesan

Second Advisor

Dr. Osama Abudayyeh

Third Advisor

Dr. C. R. Krishnaswamy

Access Setting

Masters Thesis-Open Access

Abstract

One key reason for the poor performance of small construction establishments in securing a higher chunk of the annual project volume is funding. While construction industry does not require a large capital investment it does require a large working capital to start up the project and generate bills so that the resulting cash flow may take over the remaining funding requirements. Unfortunately for small contractors there are very limited options available from the banks or other lending institutions to cover this large working capital requirement in the absence of sufficient collateral. The "Project Finance" method, which has been used in some countries in different forms has been suggested in this thesis as the most effective method for small contractors in the United States.

The problems of small and start up contractors in funding their projects have been identified through literature review. The current financing practices were observed through interviewing three contractors and one bank in the Kalamazoo area and subsequently a model has been proposed using which a small start up company could seek higher growth. The growth rates that can be achieved using the project finance model in contrast with the traditional "line of credit" based growth rates have been empirically worked out using assumed data.

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