Dear All,

When the client doesn't pay the contractor for several months, the contractor perforemance is affected for sure, and to calculate this effect in terms of "what could have been done if the contractor was paid on time and what is the related time extension" is difficult if it's almost impossible, at least at certain schedule's size.

I'm proposing a menthod ( not 100% accurate ) and I want assessment from you, it's as follows:

I assume a new unit of measure and name it "MoneyDay", it's Money x Day = MoneyDay.

so, value of delayed payment x delay period (Calenday Days) = Delayed MoneyDays, so far it's easy.

Now, assume that the contractor finished all the work without a single payment from the Client, not even the down payment.

at this point we should extract the DAILY Cash flow from the Baseline, assuming that the schedule is 100 Calendar Days long, we multiply the amount of Day 1 Cash flow by 100 Days of Delay, Day 2 Cash flow by 99 Days of Delay, and so on. This is going to be a big Number of MoneyDays

After we devied the actual Delayed MoneyDays / Assumed Delayed MoneyDays = Delay %

the Delay % x Project Duration = Extension of time due to delayed payments.

Now, one last step for considering the lack of perforemance of the contractor like low productivity and bad money management and anyother concurent delays.

We divide the Actual Gross Invoiced from Contractor / Actual Paid to Contractor = Actual perforemance of Contractor, which shall be multiped by the Extension of time due to delayed payments, with Maximum 100% limit of the Extension of time duration added to contractor End Date. For Example if all payments are 1000$ and Gross invoice is 3000$ and Extension of time due to delayed payment is 10 days, then contractor Actual perforemance is 300%, yet the contractor deserves only 100% of the Extension which is 10 Days only.

Last thing to consider for calculating the contractor perforemance that, if the contractor paid for supplies, like long lead items and it's not delivered on site yet and it didn't show on the Actual Gross Invoice from the Contractor, the contractor shall provide the evidence for that amount to be considered in the calculations.

the resulted days for extension should be added to end date of the contract since it cann't be considered as an event has certain start and related to certain activities in the schedule.

thanks,

Ahmad AbdRabou.

Planning Engineer.