Threats to Contractor’s Cash Flow under Remeasured Public Works Contracts

Abstract

Cash flow constitutes the bloodstream for contractors. The contractual conditions along with the legal rules are used to set the expected cash flow and entitlements for the contractor considering the executed contract. There are two types of construction contracts: private works contract and public works contract. Under public works contracts, financing is by the public fund, so some legal restrictions are made to prevent manipulation of the public benefit. Hence, this research addresses the threats to the contractor’s cash flow and entitlements stemming from the remeasurement process under public works contracts. This paper uses a multistep interdependent desktop research methodology to study the degree of compatibility of a well-known standard form of contract conditions when used under the Egyptian laws for tenders and bids because the priority of offer concept may severely affect the quantification of the contractor’s money due under the applicable contract provisions. Consequently, a conclusion will highlight some threats, which can be considered during the risk assessment carried out during the tendering phase. So the probable disputes pertaining thereto will decline. Such study may be applicable to all other Arab laws inspired by the Egyptian laws.