Project Finance Flashcards
What is a provisional sum?
A financial provision for costs that are difficult to estimate in advance.
What is the difference between a defined and undefined provisional sum?
A defined provisional sum is when the work is not completely defined but sufficient details can be provided. An example of this may be with an early estimate for desks, where the number is known, but the size, finish, sit/stand and type of chair is not known.
An undefined provisional sum is when much less or no information can be defined in advance. An example of this may be a client request for a media room on a project, but the the details and specification are completely unknown at the point of estimate.
Give some examples on value engineering on your projects.
- Low iron glass to normal glass (low iron is much more expensive, but had a more pure colour and higher light transmittance.
- Change of door handles
- carpet and flooring specification.
- Re-use of steel from slab cuts
- Manual blinds.
Opportunity cost of financial value vs aspirational elements of the clients new workplace. Low iron glass vs manual blinds - AV experience.
How is contingency dealt with on a project?
- often a percentage of budget (eg 10%)
- could be generated using risk register - uncertain events.
What is a final account statement?
A legally binding document that shows the final payment amount due to the contractor after all work has been completed.
What is a rolling final account?
Rolling final accounts is a method of ensuring that all instructions and cost effects to a project are agreed and up-to-date at the point of the latest financial report.
What is EBITDA?
Earnings before interest, taxes, depreciation, and amortization (used as an indicator of the overall profitability of a business). Amortization is a period in which a debt is reduced or paid off by regular payments.
