A Review and Update of the Virginia Department of Transportation's Cash Flow Forecasting Model: Interim Report

About the report:

The Virginia Department of Transportation uses a cash flow forecasting model to predict operations expenditures by month. Components of this general forecasting model estimate line items in the VDOT budget. The cash flow model was developed in the early 1980's and has not been updated since 1988. This project involved reviewing and updating several components of the cash flow model, namely, the monthly factors submodel used to predict monthly payments to construction contracts, and the maintenance expenditures submodel, used to predict maintenance payments. The project produced an update of the monthly factors submodel by, for the most part, following the same basic methodology used in the development of the general cash flow model. A chart of the new monthly factors parameters is in the appendix. The authors employed a new approach to formulate a forecasting model to estimate maintenance expenditures. The resulting forecasting model is on page 11. The authors will work in conjunction with Financial Planning and Debt Management staff in the coming months to evaluate the forecasting methods suggested by the update.

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