An empirical examination of project contractors' supply-chain cash flow performance and owners' payment patterns

Supply-chain (SC) cash flow performance is an essential component of SC performance management. Despite the panoply of approaches to SC cash flow modeling, relatively few published studies assess the effect of SC cash flow performance on a project contractor's financial performance. Little research thus explores the behavioral patterns in the project owner-contractor dyad in the context of payment-term negotiation for improving the SC cash flow performance of a project contractor. Using data from 42 Taiwanese construction project contracting corporations, this paper systematically quantifies the effects of SC cash flow performance on the financial performance of construction project contractors. Further analysis using data from 118 returned, usable surveys reveals important behavioral patterns of project owners regarding payment terms with project contractors during the contracting phase of construction projects. These behavioral patterns provide project contractors with a base for supporting implementation efforts for improving SC cash flow performance.