Commercial Management (Level 1/2/3) Flashcards
What is your understanding of the components that make the cost of the project to a contractor?
Direct costs:
- labour
- materials
- equipment
- subcontractors/suppliers
Indirect costs
- project management
- overhead
- contingencies/risk
What do you understand by the term working estimate?
An estimate that is constantly being updated and progressed during the design stages and increasing in accuracy
What are the key components of a CVR report in respect to cost/value to date?
Understand the accounting period and cut off date
Run a CTD report which determine the culminative value to the agreed date
Analyse the actual costs against the forecasted in month and compare with the actual progress on site
I then produce a narrative to outline the projects position in terms of cost and programme
What are the key components of a CVR report in respect to cost/value to complete?
Estimate of total cost of completing the project based on current performance and projections for future expenditures
Explain the CVR process
The Cost Value Reconciliation (CVR) process compares actual costs incurred to date with the value of work completed. This helps assess the financial performance of a project, identify any discrepancies between planned and actual costs, and make informed decisions to optimise project outcomes and profitability
What you understand by the term liability?
Liability refers to the overall amount of obligations or debts that an individual or entity is legally responsible for, all financial and legal obligations that have been incurred but may not yet have been settled
How does liability differ from cost?
Cost refers to the sum of money that has been actually disbursed or paid out to fulfil those liabilities
What would you consider before constructing a project cash flow forecast?
Firstly, I would consider the Main Contract Conditions, ours are all NEC Option C or E, therefore CTD + Fee
I’d therefore review the project scope and programme to against budget and cost estimates to produce an FTC
This would outline my outgoings
Based on our payment terms with the Client, incomings would follow the same curve, however a month earlier
I would also consider Contingencies and Risks and Inflation and Economic Factors
Why is the construction of a cash flow forecast so important?
Highlights the income and expenditure of a business/project over time, used to ensure the business stays cash positive
How is wastage calculated?
Quantify the total of each material required on the project. Use industry standards to determine the waste amount for each material. Subtract this percentage from the total to give you usable amount
What insurances are required under a contract? How are they included in a tender?
Public Liability Insurance covers for claims made by third parties for bodily injury or property damage arising from the contractor’s activities on the project site
Employer’s liability insurance covers claims made by employees for work-related injuries or illnesses.
Professional indemnity insurance covers for claims arising from errors, omissions, or negligence in professional services provided by the contractor, such as design, consulting, or advisory services.
Contractors all risks insurance provides coverage for loss or damage to the construction works, materials, and equipment during the construction process.
Product liability insurance covers claims for bodily injury or property damage caused by defective products supplied or installed by the contractor.
Tender budget v Project Budget?
Tender Budget - Estimated cost or price provided by contractors or suppliers in response to a tender
Project Budget - Estimated financial plan required to complete a specific project within a defined scope, timeframe, and quality standard
Example of value engineering you have undertaken on your projects?
When working on Oswestry WTW, as it’s a clean water site, we had to provide lighting to the new buildings and walkways. I reviewed the lighting proposal with the electrical engineers and came up with a layout that provided the same coverage but with less lights
What do you do with the cost data generated by your projects? Is it kept centrally for future use?
Yes, it’s kept securely on our internal finance. Used for future use for benchmarking
How did you satisfy yourself that you were in receipt of all project costs for the CVR?
I run a report to the month end cut off, then undertake a check list analysing the costs in the month against manual records:
- Ensure all staff who have worked on the project, have completed timesheets and costs are included
- Ensure all labour are inline with allocation sheets
- Ensure all plant/equipment is inline with hire records
- Ensure all materials are inline with those that have been delivered, cross checking delivery notes
- Ensure all subcontractor payments are included, accrual for any works that have been completed but yet to be paid
