Question 2 - Cash Flow analysis a) Explain the importance from both a client's and contractor's perspective, of maintaining cash flow and budgetary management process/ systems. (5 Marks) b) Your company has a contract worth 2.4m with major construction contractor LP construction Ltd. The contract period is 10 months, and an interim valuation will be carried out at the end of each calendar month. Retentions and project profit for the contract are estimated at 10% and 5% respectively. Table 1 shows the anticipated cumulative gross valuation for each month based on the contractor's work program and the defects liability period is six months after practical completion Table 1: Monthly valuation schedule Valuation No. Cumulative Gross Valuation 180,000 2 380,000 3 760,000 4 1,200,000 5 1,640,000 6 2,000,000 7 2,280,000 8 2,400,000 Using the above interim payment information, calculate the following: a. Cumulative nett valuations (2 marks) b. Monthly payments received (2 marks) c. Cumulative cost (2 marks) d. Monthly cost (2 marks) e. Using a graph sheet plot a Saw tooth diagram to illustrate the positive and negative cash flow for each month. (10 marks) f. Advice the contractor on maximum overdraft required for the project. (2 marks)