Modelling the domino effect of advance payment system on project cash flow and organisational performance

Omopariola, Emmanuel Dele and Windapo, Abimbola Olukemi and Edwards, David J. and Aigbavboa, Clinton Ohis and Yakubu, Sunday Ukwe-Nya and Obari, Onimisi (2023) Modelling the domino effect of advance payment system on project cash flow and organisational performance. Engineering, Construction and Architectural Management. ISSN 0969-9988

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Previous studies have postulated that an advance payment system (APS) positively impacts the contractor's working capital and is paramount to ensuring an efficient and effective project cash flow process. However, scant research has been undertaken to empirically establish the cash flow performance and domino effect of APS on project and organisational performance.

The epistemological design adopted a positivist philosophical stance augmented by deductive reasoning to explore the phenomena under investigation. Primary quantitative data were collected from 504 Construction Industry Development Board (CIDB) registered contractors (within the grade bandings 1–9) in South Africa. A five-point Likert scale was utilised, and subsequent data accrued were analysed using structural equation modelling (SEM).

Emergent findings reveal that the mandatory use of an APS does not guarantee a positive project cash flow, an improvement in organisational performance or an improvement in project performance.

Practical implications
The ensuing discussion reveals the contributory influence of APS on positive cash flow and organisational performance, although APS implementation alone will not achieve these objectives. Practically, the research accentuates the need for various measures to be concurrently adopted (including APS) towards ensuring a positive project cash flow and improved organisational and project performance.

There is limited empirical research on cash flow performance and the domino effect of APS on project and organisational performance in South Africa, nor indeed, the wider geographical location of Africa as a continent. This study addresses this gap in the prevailing body of knowledge.

Item Type: Article
Identification Number:
1 October 2023Accepted
16 October 2023Published Online
Uncontrolled Keywords: advance payment system, project cash flow, organisational performance, domino effect, project performance
Subjects: CAH13 - architecture, building and planning > CAH13-01 - architecture, building and planning > CAH13-01-02 - building
Divisions: Faculty of Computing, Engineering and the Built Environment > School of Engineering and the Built Environment > Dept. of Built Environment
Depositing User: Gemma Tonks
Date Deposited: 25 Oct 2023 14:54
Last Modified: 25 Oct 2023 14:54

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