Key takeaways
- The monthly average gets the total right, but it cannot tell you which month is tightest. In this example the peak month pays THB 65.6 m against an average of THB 32.2 m, or 2.04 times.
- If funds are set aside equally every month, then at month 24 actual payments will be ahead of the funds prepared by THB 137.3 m.
- Peak Funding is the maximum cumulative negative balance, not the total construction cost. In this example it peaks at THB 867.9 m in month 25, and cash turns positive once transfers begin.
Why the average is misleading
A construction budget of THB 1,000 million over a 30-month build gives an average of THB 33 million per month. The figure is mathematically correct, but no month actually pays that amount. Construction starts slowly, accelerates sharply in the middle and slows towards the end, so the cumulative progress curve takes the shape of an S. If you plan the facility using the average, you will run short of cash in the middle of the project and have more cash than you need at the start.
All figures on this page come from a sample project assumed purely to explain the method: a condominium with a construction cost (Hard Cost) of THB 1,000 million and total sales value of THB 2,100 million. It is not data from a real project.
Step 1: Break down Hard Cost to 100%
A usable S-curve should be built from work packages, not by drawing one line over the whole project. The packages must add up to exactly 100%. Contractor OH&P of 8–12% is already embedded in Hard Cost, so do not add it again.
| Work package | Reference range | Used in example | Month range |
|---|---|---|---|
| Preliminaries / General Conditions | 5–8% | 6% | 1–30 |
| Piling, Foundation, Substructure | 8–12% | 10% | 1–8 |
| Superstructure | 25–30% | 27% | 7–17 |
| Architectural Works & Finishes | 25–30% | 26% | 14–24 |
| MEP Systems | 18–25% | 20% | 14–24 |
| Lifts / Vertical Transportation | 3–5% | 4% | Milestones at months 12, 22 and 28 |
| External Works, Landscape, Pool | 5–8% | 7% | 24–30 |
| Total Hard Cost | 100% |
The reference ranges are approximate for mid- to high-rise condominiums in Thailand. Piling and foundations can reach 15% where there is a basement or difficult soil, and external works for a resort project can reach 10–12%. When one package moves, reduce the others so the total remains 100%, and replace the ranges with the actual BOQ once it is available.
Step 2: Costs outside Hard Cost
| Cost layer | % of Hard Cost | THB m | Payment timing |
|---|---|---|---|
| Hard Cost | 100% | 1,000.0 | By progress payment |
| Contingency | 5% | 50.0 | By progress |
| Soft Cost (design, consultants, permits, EIA) | 12% | 120.0 | 40% before construction starts, the rest by progress |
| Total construction cost and Soft Cost | 117% | 1,170.0 |
This example sells units without furniture. If units are sold fully furnished, add FF&E of a further 5–10% of Hard Cost, separate from this table. Interest is calculated separately from the actual loan balance in the funding gap step.
Step 3: Payment terms reshape the curve
The progress curve is not the cash curve. Between the two sit contract terms that make the timing of cash outflows differ from the actual work.
| Conditions | Example | Effect on cash |
|---|---|---|
| Advance Payment | 10% paid at month 0, recovered through progress payments | A large cash outflow before real work begins |
| Retention | 5% withheld, released 12 months after completion | Defers THB 50 m of outflow to month 42 |
| Payment Lag | 30–45 days after the progress payment is certified | Defers outflows by 1–2 months |
| Procurement Lead | Lifts and MEP ordered in advance | Committed amounts run ahead of progress |
Result: average vs actual payments
| Month range | % work progress | Hard + Soft + Contingency payments (THB m) | Monthly average (THB m) |
|---|---|---|---|
| Before start (−6 to −1) | — | 41.1 | 6.9 |
| Month 0 (advance + Soft Cost) | — | 106.9 | 106.9 |
| 1–6 | 9.1% | 64.5 | 10.7 |
| 7–12 | 19.6% | 151.9 | 25.3 |
| 13–18 | 33.1% | 301.2 | 50.2 |
| 19–24 | 29.7% | 348.7 | 58.1 |
| 25–30 | 8.4% | 98.5 | 16.4 |
| 31–33 | — | 7.2 | 2.4 |
| Month 42 (retention release) | — | 50.0 | 50.0 |
| Total | 100% | 1,170.0 |
Figures in the table are rounded, so the sum may differ slightly from the total.
Peak : average ratio
Peak burn ÷ average burn = 65.6 ÷ 32.2 = 2.04 times
The peak payment month is month 20, at THB 65.6 m. The average over months 1–30 is THB 32.2 m. This ratio falls within the 2.0–2.5 times range used to check the S-curve of projects of this type.
If payments followed the average from month 1 to month 32, they would be THB 30.4 m per month. At month 24, cumulative actual payments are THB 866.3 m, but the funds prepared on the average basis are THB 729.0 m. The shortfall is THB 137.3 m, even though the total for the whole project is correct.
Limitations of the sample curve: the curve passes through 6.3% of work at 15% of time, 42.6% at 50% of time and 93.5% at 85% of time. The first two points fall within the general reference ranges (5–10% and 40–45%), while the last is slightly above the 85–90% reference range. Work packages that compress the timeline make the curve steeper and finish the work sooner. Real data from the master schedule should therefore always replace it.
When measuring the peak : average ratio, state the divisor clearly. Dividing by construction months only gives a different result from dividing by the full period over which money is spent, which includes the periods before and after construction. A longer divisor raises the ratio even though the curve has not changed.
Typical S-curve benchmark
| % progress | Cumulative % of CAPEX | Main activities |
|---|---|---|
| 0–10% | 5–8% | Site Preparation, Foundation |
| 10–30% | 15–25% | Substructure |
| 30–50% | 35–45% | Upper-floor structure, MEP rough-in |
| 50–70% | 55–70% | Facade, MEP Installation |
| 70–85% | 75–85% | Interior, start of finishing |
| 85–95% | 90–95% | Finishing, FF&E |
| 95–100% | 100% | Snag List, Commissioning |
What is Peak Funding
Peak Funding is the maximum cumulative negative balance of the project at any point. It shows the most external funding the project needs before transfer proceeds arrive. The project's cash curve is J-shaped: cash goes out first for the land, turns further negative during construction, then rises sharply at transfer.
| Month | Event | Cumulative net cash flow before financing (THB m) |
|---|---|---|
| −12 | Land payment THB 250 m | −250.0 |
| 0 | Construction starts, 20% sold | −347.6 |
| 12 | 44% sold | −446.9 |
| 18 | Peak construction activity | −640.2 |
| 24 | Works near completion, curve steep | −863.2 |
| 25 | Peak Funding | −867.9 |
| 30 | Works complete, 80% sold | −867.2 |
| 31 | First transfers | −448.3 |
| 33 | Cumulative cash turns positive | 157.5 |
Note that the peak is not a sharp spike but stays flat at around −860 to −868 THB m from month 24 to 30, because work slows towards the end and customer instalments arrive just in time to match the payments. This is when the facility is fully drawn for the longest, and when a one-month delay costs the most.
What changes Peak Funding
| Factor | Direction |
|---|---|
| Cumulative sales at completion | Higher: Peak falls |
| Share of down payments before transfer | Larger: Peak falls |
| Construction period | Longer: negative balance lasts longer and interest rises |
| Contractor credit terms | Longer: Peak falls, but often at the cost of price or security |
| Phasing | Peak per phase falls |
| Speed of transfer | Faster transfer: Peak falls faster and debt is repaid sooner |
Plan drawdown to follow the curve
- Use equity and customer instalments first, then draw the loan, to reduce negative carry.
- Draw debt when payment is actually due, and do not draw more than needed.
- Hold a reserve of 5–10% of drawdown to absorb forecast errors.
- Pay particular attention to the period from 40% to 65% of the timeline, when cash outflows are heaviest.
- Compare actual payments with the S-curve every month, and revise the curve when the programme changes.
Once you have the outflow curve, the next step is to lay the inflows on the same curve. See How to build a monthly funding gap analysis