Forecasting of working-capital requirements under capital constraints — A Monte Carlo simulation approach

Abstract In major contracts, the contractor provides a planned progress schedule and corresponding expenditure budgets, and agrees to a minimum elapsed time between successive claims. The total number of contracts in the environment and their arrival, given a planning horizon, is probabilistically known. The probability of winning with a given bid value against competitors is also known. Using the Monte Carlo simulation approach, we provide a method for forecasting the working-capital requirements under capital constraints.