Attribute 5 - Commercial

Question 1

What would you do if your job was going over budget / programme?

Answer 1

Complete a CVR (Cost Value Reconciliation)- contract review LOR specific. The difference between value and cost AKA margin. Where we stand at that point in time on specific things e.g. labour/materials/plant/staff/subcontractors/ sundries. They look at outputs.
From this- commercial decisions are made to head back towards our tender position. (This is carried out monthly).
If we are looking likely to overspend, we look at the programme and see if there are any CE’s/ EWN’s.
What we would do: run through with delivery team our issues and setup a risk reduction meeting with our client.

Question 2

Explain how you compile a fee proposal for a new project.

Answer 2

Depends on the contract stated. With Option C start with a scope of works. Estimators would calculate the price using design info. Markups & margins added. That comes to the fee- look up estimating.

Question 3

Can you talk through the elements that make up your pay rate?

Answer 3

Basic Salary

Travel/ mobility

Levys i.e. ICE membership/ IT account/ CITB Levy for CIS scheme

Pension

Defined cost (total cost- disallowed cost) + fee = pay rate

Question 4

How do government companies get funding?

Answer 4

Government grants- HS2 approach the government. BBVS Option F with HS2- They hold no design responsibility for permanent works. They are to co-ordinate all the sub-contractors who deliver the works.

Question 5

Can you explain the type of contract that your project was under?

Answer 5

Target cost Option C- Pain and gain is shared to establish collaborative working. We don’t have design responsibility unless for reinforcement and temporary works.

Both client and contractor have an immediate interest in keeping costs down to a minimum. This is why Option C was chosen.

Question 6

Can you explain the difference between different types of contracts?

Answer 6

Design responsibilities. Traditional vs design & build.

Question 7

What are the different type of NEC contracts?

Answer 7

Priced Contracts
A - Activity schedule
B - Bill of quantities

Target Contracts
C - Activity schedule
D - Bill of quantities

Cost Reimbursable
E - None - Based on actual cost (ECC3 defined cost)

Management Contract
F - None - Based on actual cost (ECC3 defined cost)

Question 8

What is the risk allocation of NEC3 contracts?

Answer 8

For example, for Priced contracts (A) the risk falls on the contractor.

However for Cost Reimbursable (E) and Management contractors (F) the
risk falls on the employer.

But for Target contracts (C) the risk is shared between both parties in a ‘pain gain’ mechanism in which the percentage is decided during the tender
stage.

Question 9

You are allowed CE’s on NEC option A and NEC option C so what’s different between the two options?

Answer 9

Option C is target cost so there is a pain & gain mechanism. CE’s lead to an increase in the target cost which in turn could lead to a share in the gain at the end of the contract.

Question 10

What is an NEC option E?

Answer 10

Cost reimbursable. Open book, large financial risk on client.

Question 11

What would the process be internally for including enough time on projects, how would you make sure you are including the correct amount?

Answer 11

Understanding outputs of delivery and methodology to build a current programme for the works (Clause 32). Openly telling the client this is the programme to deliver the works.

Question 12

Under NEC option A and option C, can you talk me through the basic steps of a CE being agree?

Answer 12

EWN issued to raise concern of additional time/cost

Contractor notifies client (CE)

Followed by a meeting of discussion (Risk Reduction meeting)

Submit quotation

Quotation reviewed and agreed

Instruction is issued (CI) to deliver the works

CE implemented

Question 13

Can you outline the risk allocation difference between the option A and option E on NEC contracts?

Answer 13

Option A- Financial burden on contractor.

Option E- Financial burden on client.

Question 14

What allowances did you make for things like risk and optimism bias?

Answer 14

When estimating- they apply a percentage to the overall cost (make an allowance for it). They run a risk register.

Question 15

How do HS2 fund their projects?

Answer 15

Government grants taken from the tax payer.

Question 16

What type of contract was Old Oak Common?

Answer 16

It was a design and build target cost procurement route.

Question 17

What was the form of contract between Expanded and BBVS?

Answer 17

The contract between EXP and BBVS was a target cost contract which best fits the NEC3 Option C

Question 18

What are some of the key features of this contract?

Answer 18

A type of cost reimbursable contract.

Costs can be claimed up to a fixed (target) level.

Where the final cost is above or below this target, the difference – gain or loss – is shared in an agreed proportion between the Principal Contractor and the Contractor.

Question 19

How was risk managed from a commercial aspect?

Answer 19

Risk was managed by using a risk register. We listed the risks estimated costs and probability and then tried to take steps to prevent that risk occurring if we could/if it was worth it. We rarely spend money to avoid risks.

Question 20

What is the clause which outlines EWN procedures

Answer 20

Clause 16

Question 21

What’s the difference between Clause 31 & 32

Answer 21

Clause 31 is the initial programme outlined at the start of the project, the 32 is submitted monthly by our project planner that reflects the changes expected on site. It is a revised programme.

Question 22

What is the clause which outlines CE procedures

Answer 22

Clause 60

Question 23

What is the critical path?

Answer 23

The sequence of tasks or activities that determines the minimum duration required to complete a project. It is the path representing the series of tasks that must be completed without delay for the project to finish on time.