The Research of the Settlement Model in Construction Contract Price Based on the Time Value

This paper establishes a model of equivalent price settlement (time-dependent) in engineering construction contracts brought by the principle of time value of capital and completes a sensitivity analysis to the value realization of the contract price from three aspects of the changes in rate of return on investments, settlement frequency and cascade reduced settlement of the project. The calculating analysis proves that the time value of capital is an objective existence, which requires construction companies to speed cash flow, early recovery of funds, meanwhile, it also calls for changing the current manner of equivalent price settlement (time-independent).