Vose SoftwareModelRisk example · Projects and construction
Construction Cash Flow and Peak Funding
Is a US$40 million facility enough? A developer's monthly cash flow, peak funding and profit.
From the model’s saved run
Peak funding
The largest drawn balance, against the facility the bank offers.
| Measure | Unit | Value |
|---|---|---|
| Facility limit (Inputs sheet) | US$m | 40.0 |
| Mean peak funding | US$m | 38.6 |
| Chance that the peak exceeds the facility | probability | 25.2% |
| Median month of the peak | month | 30 |
S-curve (cumulative probability) of Peak funding from the saved simulation.
The business question
A developer has bought a site for US$8 million and will build 120 apartments over about 30 months: a construction contract of about US$45 million, plus its own fees, site costs and sales office at US$120,000 a month while building. It puts in US$15 million of equity, and the bank offers a US$40 million revolving facility at 7%.
Construction spend follows the familiar S-curve: slow at first, fastest a little before mid-way, slow at the end. Off-plan buyers pay a 10% deposit when they sign and the balance at completion. Apartments still unsold at completion are sold afterwards at a discount. The funding need peaks at completion, when the money has been spent and only the deposits have come in.
The model simulates the monthly cash flow and the facility, and asks whether US$40 million is enough.
- Who it is for
- Developers, development and project finance teams, lenders, and development managers.
- Main outputs
- Peak funding: mean, P80, P90 and the month it occurs · the chance of exceeding the facility · the drawn balance by month with its range · profit and profit on cost · what drives the peak and the profit.
How the model works
Three sheets after this one, read from left to right. Each one feeds the next.
Inputs sheet
The land cost and the equity. The facility limit and its interest rate; the construction cost and duration (PERT), the shape of the S-curve and the monthly overheads. The number of apartments, today's price and a market factor, the off-plan sales pace, the deposit, and the sales after completion.
Cash flow sheet
Each month, construction spend = cost × the increase in the S-curve (the cumulative Beta distribution of the month ÷ the duration), plus the overheads while building. Receipts are deposits on new contracts, the balances the month after completion, and later sales.
Cash is used first; the facility is drawn when cash runs out and repaid from receipts, and interest is charged on the drawn balance.
Results sheet
Peak funding and when it occurs, the chance that it exceeds the facility, the drawn balance by month, profit after interest, and what drives the peak and the profit.
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The results in detail
Sizing the facility
The facility needed for each chance of it being enough: percentiles of the peak funding.
Line chart: 90th percentile, Median, Mean, 10th percentile.
| Measure | Unit | Value |
|---|---|---|
| For a 50% chance of being enough | US$m | 38.4 |
| For an 80% chance | US$m | 40.4 |
| For a 90% chance | US$m | 41.5 |
| For a 95% chance | US$m | 42.3 |
| For a 99% chance | US$m | 43.7 |
| For the 90% the bank requires (Inputs sheet) | US$m | 41.5 |
| Is the facility enough at 90% confidence? | No: that peak is above it |
Profit
After interest and the return of the equity.
| Measure | Unit | 10th pct | Median | 90th pct | Mean |
|---|---|---|---|---|---|
| Profit after interest | US$m | 4.5 | 9.0 | 13.4 | 9.0 |
| Profit on cost | 7.2% | 14.8% | 22.7% | 14.9% | |
| Interest paid | US$m | 2.92 | 3.26 | 3.66 | 3.28 |
| Chance of a loss | probability | 0.2% |
What drives the peak funding
Lowest and highest mean peak funding over ten equal groups of each input (VoseSimSensitivityMean), drawn from the overall mean.
Tornado chart: the inputs ranked by how far the mean output moves across each input’s range.
The ranking as a table 4 inputs
| Input (ranked by influence) | Lowest mean | Highest mean | Rank |
|---|---|---|---|
| Construction cost | 35.55 | 42.34 | 1 |
| Off-plan sales pace | 38.18 | 39.79 | 2 |
| Construction duration | 38.04 | 39.22 | 3 |
| Market price factor | 37.97 | 39.08 | 4 |
What drives the profit
Lowest and highest mean profit over ten equal groups of each input (VoseSimSensitivityMean), drawn from the overall mean.
Tornado chart: the inputs ranked by how far the mean output moves across each input’s range.
The ranking as a table 4 inputs
| Input (ranked by influence) | Lowest mean | Highest mean | Rank |
|---|---|---|---|
| Market price factor | 4.40 | 13.59 | 1 |
| Construction cost | 5.17 | 12.06 | 2 |
| Construction duration | 8.24 | 9.69 | 3 |
| Off-plan sales pace | 8.19 | 9.30 | 4 |
How to read these results
- The funding need peaks at completion: the construction cost has been spent, but only the deposits have come in. The balances paid the month after completion repay the facility in one go.
- A facility sized on the average peak leaves a real chance of running out of money at the worst moment, just before completion. Sizing it at the P90, or agreeing headroom with the bank, removes most of that risk.
- The construction cost drives the peak almost on its own. Faster off-plan sales and higher prices lower it a little through larger deposits. A longer programme raises it a little, with more interest and overheads partly offset by more deposits.
- The profit depends on the market as much as on the cost. Prices hardly move the peak, because only the deposits arrive before it, but they move the profit almost one for one.
See it move. Open the workbook, change an input on the Inputs sheet and run the simulation: every table and chart on this page updates in Excel.
Inputs and assumptions
Every assumption in the model, with its uncertainty and where it comes from. The figures are illustrative.
Site, equity and finance 5 inputs
Money in at the start, and the bank facility.
| Assumption | Unit | Value |
|---|---|---|
| Land (paid at the start)Site bought with planning consent. | US$m | 8.0 |
| Developer's equityPaid in at the start; used before the facility. | US$m | 15.0 |
| Facility limitRevolving construction loan offered by the bank. | US$m | 40.0 |
| Interest rateCharged monthly on the drawn balance. | per year | 7.0% |
| Confidence the bank requiresThe Results sheet tests the facility against the peak funding at this confidence. | probability | 90% |
Construction 5 inputs
Cost and duration, the shape of the spend profile, and the developer's own monthly costs.
| Assumption | Unit | Uncertainty | Low | Most likely | High |
|---|---|---|---|---|---|
| Construction costContract sum with design, ground and market risk. | US$m | PERT | 42.0 | 45.0 | 52.0 |
| Construction durationRounded to whole months in the model. | months | PERT | 26.0 | 30.0 | 36.0 |
| S-curve shape: αWith β: a typical S-curve, steepest a little before mid-way. | Fixed | 2.20 | |||
| S-curve shape: β | Fixed | 2.60 | |||
| Developer's overheads while buildingFees, site costs, insurance and the sales office. | US$m per month | Fixed | 0.12 | ||
Sales 8 inputs
Off-plan sales during construction, the rest after completion.
| Assumption | Unit | Uncertainty | Low | Most likely | High |
|---|---|---|---|---|---|
| Apartments | units | Fixed | 120 | ||
| Average price per apartment todayAgent's appraisal at today's values. | US$ thousand | Fixed | 580 | ||
| Market price factor at completionPrices at completion relative to today. | × today | PERT | 0.90 | 1.00 | 1.10 |
| Off-plan sales paceAn average, so the Cash flow sheet shows fractions of an apartment. | units per month | PERT | 3.0 | 5.0 | 8.0 |
| Off-plan sales startWhen the sales office opens. | month | Fixed | 4 | ||
| Deposit on signingThe balance is paid the month after completion. | of the price | Fixed | 10% | ||
| Sales after completionFinished apartments sell faster. | units per month | Fixed | 6.0 | ||
| Discount on sales after completionIncentives to clear the stock. | of the price | Fixed | 5% | ||
Units and conventions
- Money
- US$ million (US$m); apartment prices in US$ thousand.
- Months
- Month 1 is the first month of construction. The Open column is the position at the start: equity paid in, land bought.
- Facility
- A revolving loan: drawn when cash runs out, repaid from receipts, interest charged monthly on the drawn balance.
- Peak funding
- The largest drawn balance at any month-end.
Key assumptions and limitations
- Spend
- Construction cost follows a cumulative Beta S-curve over the duration; overheads are paid monthly while building; no retention or payment delays.
- Sales
- Off-plan sales at a steady average pace until completion, balances paid the month after; the rest sold later at a fixed pace and discount.
- Finance
- One interest rate, no fees, covenants or tax; the equity is used before the facility.
- Independence
- Cost, duration, sales pace and prices are independent of each other (PC-04 links cost and schedule through shared risks).
- Data
- The scheme and all figures are invented for this example.
How to use it
- Enter your scheme's land, equity, facility, cost, duration and sales assumptions on the Inputs sheet.
- Press F9 on the Cash flow sheet to see other monthly profiles; the chart beside the outputs shows each one.
- Run a simulation from the ModelRisk ribbon (10,000 samples with a fixed seed are set).
- Size the facility at the confidence the lender requires, or use the drivers to bring the peak down.
The tornado chart fills in after a simulation with ModelRisk’s classic engine.
ModelRisk functions used
- VosePERT
- Construction cost and duration, the market price factor and the off-plan sales pace.
- VoseBetaProb
- The S-curve: the cumulative share of the construction cost spent by each month.
- VoseInput, VoseOutput
- Name the uncertain inputs and the outputs, including the drawn balance in every month.
- VoseSimMean, VoseSimPercentile, VoseSimProbability
- Statistics of the simulation for the tables and charts on the Results sheet.
- VoseSimSensitivityMean
- The two tornado charts: every VoseInput ranked by how far the mean peak funding, and the mean profit, move across its range.
Further reading
- Sensitivity analysis in Excel: a tornado chart step by step (Vose guide)
- Kenley, R. (2003). Financing Construction: Cash Flows and Cash Farming. Spon Press.
- Havard, T. (2014). Financial Feasibility Studies for Property Development: Theory and Practice. Routledge.
Download the workbook and run it yourself. It opens in Excel with ModelRisk. The free trial runs every example model.
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An illustrative example: the figures are invented for teaching and do not describe a real company, project or asset. Last updated 9 October 2026.