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ENCN371 > Eric > Flashcards

Eric Flashcards

1
Q

Procurement

A

The framework within construction is brought about, acquired or obtained

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2
Q

Contract Administration

A

Handling of the business relations between the parties to the contract

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3
Q

NZ Court System (High to Low)

A

Supreme Court, High Court, District Court

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4
Q

Building Act 2004 Objectives

A

Regulate building work, establish licensing practice, set performance standards

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5
Q

CPEng NZ 2002 Objectives

A

Registration system, quality control, code of ethics, complaints and disciplinary procosess

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6
Q

Construction Contracts Act 2002 Objectives

A

Protect retentions money, fair payment regime, fast and cost-effective dispute resolution

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7
Q

Contracts Contain:

A

Promise between capable parties, creates obligation, enforceable by law

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8
Q

Privity of contract

A

Only parties to a contract can sue

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9
Q

Elements of contract

A

Offer, acceptance, consideration, intention to be bound, capacity, reality of consent, legality

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10
Q

Rules of contract

A

Do what contract tells you to do, do not do what the contract tells you not to do

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11
Q

Tender award metrics

A

Lowest price, best qualified, best proposal at stipulated price, best value

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12
Q

Delivery model for high risk/complexity and large scale

A

Alliance

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13
Q

Delivery models for increasing risk, complexity and scale

A

Measure and Value, Design-Bid-Build, Design-Build

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14
Q

Design-Bid-Build Contracts

A

Architect/Engineer to Owner, Owner to General Contractor

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15
Q

Design-Bid-Build Advantages/Disadvantages

A

A: price fixed, the contractor takes risk, low owner involvement
D: long delivery time, low margins for contractor

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16
Q

Project Manager Agent Contracts

A

Architect/Engineer to Owner, Owner to General Contractor, Owner to Project Manager

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17
Q

Project Manager Agent Advantages/Disadvantages

A

A: low owner involvement, contractor sets price, best value, no risk for PM
D: Contractor assumes risk, high risk for contractor, low margins

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18
Q

Design-Build Contracts

A

Owner to Design-Builder

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19
Q

Design-Build Advantages/Disadvantages

A

A: Claims reduction, react rapidly to scope changes
D: Selection difficulty, large staff, additional risk

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20
Q

Alliance Characteristics

A

Major contarctors/consultants become stakeholders and share the gain/loss
Open book costing
Risk shared

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21
Q

PPP Characteristics

A

Public Private Partnership
- Large scale ($50 milllion +)
- Duration (25-35 years)
- High complexity

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22
Q

Design-Bid-Build Contract types

A

Lump Sum
Measure and Value
Cost Reimbursement

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23
Q

Cost Risk Sharing (Guaranteed Maximum Price)

A

Principal shares in cost savings if less than GMP
Contractor will not be paid more if it is in excess of the GMP

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24
Q

NZS3910 Bonds

A

The contractor provides a bond of 5-10% of the contract value to ensure performance under the contract
Provided within 2 months of tender acceptance

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25
Q

Who assumes the risk of a subcontractor?

A

Principal

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26
Q

Dual role of the engineer

A

Expert advisor to and representative of the principal
Independently value work and issue certificates

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27
Q

Who grants contractor time extension?

A

Engineer

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28
Q

Valid reasons for time extension

A

Any circumstance not reasonably foreseeable by an experienced contractor at the time of tendering and not due to the fault of the contractor

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29
Q

Construction Cost Estimate

A

Determination of probable costs of any given project

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30
Q

Parametric estimating

A

Top-down:
The project is divided into units of work, cost per unit is determined to calculate the total cost

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31
Q

First Principles Estimate

A

Bottom-up:
The process of building up prices and rates for an item or piece of work

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32
Q

What percent of construction does labour cost make up?

A

30-50%

33
Q

Why is labour cost difficult to estimate?

A

Labour productivity rates vary and depend on:
Market and Environmental conditions
Work and Management Conditions

34
Q

Direct Cost Definition

A

Permanently and physically integrated into the building

35
Q

Indirect Costs Defintion

A

Items required to support construction efforts

36
Q

Contingency Definition

A

Amount added to an estimate to cover unforeseen needs of project, construction difficulties and estimating accuracy

37
Q

Describe Porter’s Five Forces Model

A

Industry competitors in centre with buyers, suppliers, potential entrants and substitutes around it

38
Q

Prisoners Dilemma Outcome

A

Nash Equilibrium is where prisoners choose the least negative outcome even though this is not the optimal outcome

39
Q

Ways of reducing uncertainty

A

Law, contracts, accounting, project/asset management, human behaviour monitoring

40
Q

Accounting Definition

A

The preparation of accounting records, analysis and interpretation of financial statements

41
Q

Economics Definition

A

Study of choices made by people who are faced with scarcity

42
Q

Two rules of finance

A
  • A dollar now is worth more than a dollar tomorrow
  • A certain dollar is worth more than a risky dollar
43
Q

Forms of business in NZ

A
  • Sole trader
  • Partnership/Joint Venture
  • Companies
44
Q

Structure of Companies

A

Shareholders -> Board of Directors -> Top Management -> Staff

45
Q

CEO, COO, CFO Roles

A

CEO responsible for COO and CFO
COO responsible for HR/Marketing Departments
CFO responsible for monetary/investing/accounting relations

46
Q

Payback Period

A

Time until cash flows recover the initial investment of the project

47
Q

Payback Rule

A

Accept project if its payback period is less than the specified cut-off period

48
Q

Limitations of the payback rule

A

Profit margins and time value of money are not taken into account

49
Q

Net Present Value Rule

A

Accept all projects with a positive net present value

50
Q

Income Statement Purpose

A

Show whether a business is profitable (shows profit and loss)

51
Q

Gross Margin

A

Revenue - Cost of Sales

52
Q

Operating Profit

A

Revenue - Cost of Sales - Operating Expenses

53
Q

Profit before income tax

A

Operating Profit - Financing Costs

54
Q

Balance Sheet Purpose

A

Show a company’s financial position at the end of a fiscal year.
Contains assets, liabilities, and equity

55
Q

Current Assets

A

Cash, materials, investments, accounts receivable

56
Q

Fixed Assets

A

Property, equipment (not liquid)

57
Q

Current Liabilities

A

Accounts payable, expenses, bank overdraft

58
Q

Long-term Liabilities

A

Bank loans, mortgages

59
Q

Equity equation

A

Total Assets - Total Liabilities

60
Q

Working Capital

A

Current Assets - Current Liabilities

61
Q

Current Ratio and Magnitude

A

Current Assets / Current Liabilities
> 1.3

62
Q

Gross Profit Margin Ratio

A

Gross Profit / Revenue

63
Q

Net Profit Margin Ratio

A

Net Profit / Revenue

64
Q

Return on Equity Ratio

A

Net Profit / Owner Equity

65
Q

Acid Test Ratio

A

(Cash + Accounts Receivables) / Current Liabilities

66
Q

Working Capital Turnover

A

Revenue / Working Capital

67
Q

Break-even point

A

Income from sales = Total expenses

68
Q

Break-even point equation

A

Fixed Costs / (Price - Variable Costs)

69
Q

Increase profit by

A

Increasing number of units sold or price, decreasing variable and fixed costs

70
Q

Costing Methods Objective

A

Assigning Overhead

71
Q

Three Co-Equal Arms of Government

A

Legislature, Executive and Judiciary

72
Q

Legislature in NZ

A

120 MPs who pass statutory acts (Supreme Law)

73
Q

Executive in NZ

A

Government Departments, Ministries, Councils and Universities
Pass secondary legislation

74
Q

Judiciary in NZ

A

Senior and Lower Courts
Rule on matters of the law

75
Q

Acceptable Solution Compliance

A

Compliance with an acceptable solution or verification method will comply with the building code, however they are not the only way

76
Q

Limitations of Return on Investment

A

No account for time value of money or the size of the project

77
Q

Are productivity rates specified in an estimate

A

No

78
Q

Gross Profit

A

Profit before Income Tax - Financing Costs

79
Q

What does a low order cut set represent?

A

High safety vulnerability

ENCN371 (2 decks)

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