ABC Construction Company is conducting an industry analysis of project management practices in the construction industry. As a financial analyst, you are tasked with assessing the financial implications of various project management approaches used by construction firms.   a) Explain the concept of Earned Value Management (EVM) and its significance in construction project cost control.   b) Compare and contrast the traditional Cost Plus Fixed Fee (CPFF) contract and the Lump Sum Fixed Price (LSFP) contract in terms of risk allocation and financial outcomes for both the construction firm and the client.   c) Evaluate the impact of working capital management on construction project profitability and cash flow, considering the unique challenges and cash flow patterns in the construction industry

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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ABC Construction Company is conducting an industry analysis of project management practices in the construction industry. As a financial analyst, you are tasked with assessing the financial implications of various project management approaches used by construction firms.

 

a) Explain the concept of Earned Value Management (EVM) and its significance in construction project cost control.

 

b) Compare and contrast the traditional Cost Plus Fixed Fee (CPFF) contract and the Lump Sum Fixed Price (LSFP) contract in terms of risk allocation and financial outcomes for both the construction firm and the client.

 

c) Evaluate the impact of working capital management on construction project profitability and cash flow, considering the unique challenges and cash flow patterns in the construction industry.

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