Finance for Construction Managers CMGT 7330

Learning Outcomes

Upon successful completion of this course, the student will be able to:

• Discuss the basic concepts of accounting.
• Explain the function of annual reports, balance sheets, income statements, and cash flow statements.
• Describe the sections of balance sheets, income statements, and cash flow statements:
• Describe the common entries in financial statements.
• Describe the entries in financial statements typically used by construction companies.
• Carry out ratio analysis:
• Compare company ratios.
• Develop construction specific ratios.
• Describe the basic principles of full cycle accounting:
• Carry out a simple full cycle accounting example.
• Describe the relationship between example accounts and financial statement entries.
• Explain the basic function of management accounting:
• Identify costs as fixed or variable.
• Calculate basic budget variances.
• Determine what costs are committed and calculate committed costs.
• Explain the concept of time value of money:
• Solve basic time value problems.
• Describe how risk is relevant in financial transactions:
• Illustrate how tolerance to risk varies with the amount of money risked, the amount of the return, and the number of times the transaction will take place.
• Illustrate how risk affects required rate of return.
• Describe how projects can be assessed using simple payback, NPV, and IRR.
• Explain the significance of micro and macro economics to the construction industry.
• Analyse pricing decisions and responses to competitor's pricing using business and financial concepts.
• Analyse projects to determine whether they are profitable.
• Choose between projects using financial criteria.
• Construct a budget.
• Forecast cash flows for a construction company.

Effective as of Fall 2014

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