A Framework for Invoice Management in Construction

Construction project costs are exchanged in the form of large numbers of purchase orders, which translates into many thousands of invoices. In typical contractual relationships, these invoices are exchanged between all parties involved in a construction project, including owners, engineers, architects, general contractors, sub-contractors, and many trades. The research presented in this thesis recognizes two challenges associated with invoice management: (1) the cost of invoice processing, given the involvement of numerous full-time employees from all parties involved in the project; and (2) the cost of delayed invoice payments, which is typically a cost that is consequently added to overall project cost. Ensuring on-time payment of invoices, even when funds are available, can be a challenging exercise due to the variety, the volume, and the unpredictable number of invoices received at any given time. The need for implementing processing protocols to ensure efficient management of invoices as well as procedures to minimize the amount of rework in the process cannot be ignored. This research proposes an integrated model of lean manufacturing with cohort and discrete event simulations, in order to streamline construction invoice processing and payment, ultimately minimizing invoice-processing times and delayed invoices payments. This research also proposes a cash flow management strategy and a project financial support decision model. The proposed methodology is developed, implemented, tested, and validated for two distinct sectors of the construction industry: heavy industrial (oil sands) and homebuilding