Case Study Questions Flashcards

1
Q

How does the Retention Bond work? What are Adv/Disadv?

A

This is a bond provided by the contractor in lieu of taking retention from interim payments.
It should be equal to the same value as the retention deducted.
The requirement for the bond should be stated in the contract particulars.

If the contractor does not maintain the retention bond the employer can deduct retention from interim payments.
If the bond is subsequently taken out, the retention deducted must be repaid to the contractor.

The employer would have to pay the premium for taking out the bond.
It may reduce the contractor’s incentive to complete making good defects promptly.
It reduces the employer’s cashflow.
The employer would not get the interest accruing on the amount of the retention bond.

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2
Q

What is Earned Value Management?

A

Earned Value Analysis is a technique used to forecast the final financial position of a project.
The technique compares the current progress achieved to date with the planned progress at a given point in time.
It also considers the current costs incurred with planned costs over the same time period.
The EVA determines what value of work would have been achieved and what costs would have been incurred if the works had been on programme to forecast future performance and to highlight potential cost overspends and time overruns.

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3
Q

How were Direct Payments included into the works?

A

The direct payment provision was agreed by all parties and introduced as an Amendment to the Contract.
Contractor’s and Site Representatives would verify the delivery notes and invoices and provide their non objection to the Employer.

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4
Q

How did you define these client objectives?

A

I drafted provisional objectives through my own knowledge of the Client and this was verified between myself and my Client-direct Manager.

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5
Q

As per the Cashflow graphs, variance between Planned v Actual has started to occur right from the start? Can you explain me why?

A

The graph was taken from an individual project which I felt accurately demonstrated the issue. However, in 2021, we were still suffering the after effects from Covid which was likely still affecting the Contractor’s progress. Additionally, this was an incredibly intense period for construction in the region which the Contractor perhaps may have not accounted for.

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6
Q

What was the reason(s) for under resourcing by the Contractor?

A

In 2021, we were still suffering the after effects from Covid which was likely still affecting the Contractor’s ability to resource the projects. Additionally, this was an incredibly intense period for construction in the region which the Contractor perhaps may have not accounted for.

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7
Q

When did you identify the Key issue? March 2022 or July 2022. Looks like July 2022? If its July 2022, what did you do during the period March to July?

A

I began work on this directive in July 2021 and began to uncover issues soon after. Prior to the options proposed; I undertook the desktop study, gave a number of presentations to the Client, conducted site-interviews including competency of resource and conducted continuous claims workshops.

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8
Q

Why did you give a score of ‘1’ for the option 1, in a situation like this? What if I say, Contractor could have improved Site progress under the option 1, like under the Option 3? And achieved a total of 2.75 instead of 2 as in your Conclusion, which is higher than the selected option?

A

5% of the retention held against the level of progress achieved was not seen to be able to drastically improve the progress.
The overall value of claims was higher and the initial proposals would have been greater than 10%.
In the end Option 1 was taken as part of the combined solution.

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9
Q

Option 2 supports the Contractor’s cash-outflow related to the Suppliers/Subcontractors? How did it support his other expenses ex. In house labor, staff and plant?

A

Option 2 was seen to have the least impact on cashflow for this reason. However, for this is offset by risk to the Client.

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10
Q

How did the client find money to pay direct to Subcontractors and Suppliers?

A

The Client’s organisation is publicly funded and so the funds can be drawn down from their annual budgets pending approval from the Ministry of Finance.

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11
Q

What of those direct payments to the Subcontractors and Suppliers are related to the unapproved Variations/Claims?

A

We cannot dictate how the Contractor uses the materials, however, the costs would be offset against the works included into the Contract.
The end goal being to gain approval for the Variations to increase the Contract value.

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12
Q

What was the payment process for Variations and Claims pending for approvals? Did you have an option for ‘On Account Payments”?

A

One of the reasonings behind having a bespoke Contract is to introduce the Clients Change procedure. This is because, other than an Advance Payment, On-Account payments are prohibited due to the nature of the fudning.

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13
Q

What was the Contract Conditions applicable to this project?

A

The Contract is comparable to a FIDIC 1999 with amendments to include the Clients procedures.

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14
Q

What was the Contract Provision to administer payment for Variations and Claims?

A

Payments cannot be made until the value of Claims and Variations is introduced into the Contract Sum which can only be done with Ministry approval.

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15
Q

What were the reasons for delay in finalizing Variations and Claims?

A

A combination of low-quality submissions and the Clients strict requirements to gain approvals.

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16
Q

How did you try to improve the process of Change Management Procedure? Give some examples

A

I did an analysis of the Change Procedure and made recommendations including; improved transparency between the stakeholders.

17
Q

What was the value of Variations and Claims, the Contractor was not receiving payments?

A

The Value of the outstanding Variation and Claims was approximately 500 million based on the Contractor’s submission, however, the Employer Representative did not agree with this figure, their value being a significant reduction.

18
Q

What was the value of these Contracts?

A

The Contract Value was in the region of 1 Billion Riyals.

19
Q

What the value of Advance Payment?

A

10% of the Contract Price

20
Q

What was the value of work done?

A

The Contracts were at varying stages and the study was conducted over a long period.

21
Q

What was the value of retention held by the time the issue was encountered?

A

The issues were encountered of a period, however, I would estimate in the region of 70 million Riyals.

22
Q

What was the value of outstanding payments to the Suppliers?

A

We did not have sight of the figures, however, the Contractor remained liable for all the historical debts.

23
Q

What was the value of Variations and Claims, the Contractor was not receiving payments?

A

The Value of the outstanding Variation and Claims was approximately 500 million based on the Contractor’s submission, however, the Employer Representative did not agree with this figure, their value being a significant reduction.