← Business Metric: Industry Specific (Infrastructure, Transport & Utilities) (all topics)
Working capital - construction & EPC
What it is
Total current assets - receivables, retention money, unbilled revenue, inventory and advances - measured in days of revenue. In construction it is the key balance-sheet discipline indicator, because so much capital sits in work executed but not yet paid for
Retention money is typically held for years after completion
Impact on industries
- Growth consumes cash structurally - a contractor can double revenue and go bankrupt if current assets expand faster than collections
- Government and PSU clients extend the cycle through inspection, certification and fund-release chains outside the contractor's control
- Claims and arbitration convert disputed work into long-dated assets that may never be realised in full
- It is the cleanest management-quality signal in infrastructure, separating disciplined contractors from those buying revenue with their balance sheet