Construction cash flow S‑curve

Each month's work comes off the S-curve. You bill what you built, the owner pays later and keeps retainage, and you pay your own costs as you go and your subs when you get paid.

Work in month m   = contract × S-curve share for m
Billed in month m = work in month m
Cash in           = billed × (1 − retainage), received lag months later
                  + all retainage, received after the final month + release delay
Cost in month m   = work × (1 − gross margin)
Cash out          = self-performed cost, paid in month m
                  + sub cost × (1 − retainage), paid when the owner pays + PWP lag
                  + sub retainage, paid when ours is released + PWP lag
Net cash          = cash in − cash out;  cumulative = running total
Peak cash need    = the most negative cumulative position

The S-curve

Most jobs start slow (mobilization, submittals, site work), peak in the middle and taper through punch list. The curve shapes here are beta-distribution weights: classic S is symmetric, front-loaded peaks early (site and structure heavy jobs), back-loaded peaks late (finish and equipment heavy jobs), and straight line spreads work evenly.

Assumptions to keep in mind

• No overbilling or front-loaded SOV. Billings equal work in place. Front-loading the schedule of values pulls cash forward; underbilling pushes it back.
• Self-performed cost is paid immediately. Payroll is weekly. Supplier terms (net 30) would ease the curve a little.
• Pay-when-paid passes timing risk to subs. Enforceability varies by state, and pay-if-paid is a different clause. Many subs also bill you on the same cycle you bill the owner.
• Retainage is often your profit. On thin-margin work the last dollars of profit arrive with the retainage release, months after the crews leave.
• No mobilization payment, deposits, change orders, disputes or slow pays. Each of those moves the curve. Model your worst-case lag too.

Peak cash need is what you have to fund from working capital or a line of credit while the job runs. Add it up across all your active jobs to see the real number.