Project Finance

Question 1

What is the purpose of a financial report?

Answer 1

• A financial report is a document that is produced periodically that sets out the financial position of a project.
• It’s purpose is to report against budgeted values and act as a working cost check on the project budget.

Question 2

What are some of the key points in the RICS guidance on cost reporting?

Answer 2

This guidance note highlights key areas within a cost report including:

• the purpose of cost reporting
• cost reporting models
• report formats
• establishing the budget

Question 3

How did you handle the change control process on Credit Suisse?

Answer 3

• To manage change control during this project, a change control tracker was implemented and updated during the weekly design meetings with the design team.
• All areas of design development were listed on the tracker and I was responsible for providing cost information for these changes.

Question 4

What type of provisional sums were included within the google expansion project and can you give any examples?

Answer 4

On the Google Expansion project there were defined provisional sums for the structured cabling.

A defined provisional sum is where the contractor has enough information to allow for programming and prelims within the cost.

Question 5

How did you go about agreeing the provisional sums?

Answer 5

• The provisional sums were agreed on an add and omit basis, with the provisional sums in the contract for the google expansion being omitted and the firm cost added back in, subject to review and agreement.

Question 6

How did you conduct the interim valuations on project X?

Answer 6

• Firstly I ascertained works are in accordance with the contract
• Make a fair assessment of the value of the works carried out.
• Ascertain valuation ensuring any deductions required are accounted
• Check valuation (comp check)
• Assemble associated documentation (issue letters for the Employer and Contractor)
• Issue recommendation to EA

Question 7

Why is a cashflow forecast key in a cost report?

Answer 7

• A cashflow forecast allows the employer to gain an understanding of the financial requirements over the duration of the project.
• It can also act as a check against the works complete, for example on project X I noticed the current gross valuation was behind our forecasted cashflow. I immediately raised this to the contractor and PM to ensure the PC date was still viable.

Question 8

How did you go about agreeing post contract variations with the contractor on the Google Expansion project?

Answer 8

• In the first instance I looked to gain all supporting documentation relating to the change order.
• I then look to make a fair assessment of the change order.
• For changes where I had challenges to the contractors amount, I sat down in a meeting and reviewed the change where we would come to a fair and reasonable agreement.

Question 9

Why did you ask the client on the Nottingham refurbishment how they wanted the costs presented within the cost report?

Answer 9

• From my experience each client has a different way in which they want to report the costs on a project. This could be in the way the costs are split between each level or separate pots of funding they need to report on separately.
• Either way it is always best practice to ensure the client is satisfied with how the costs are reported.

Question 10

Why did you provide a budget cost to change orders on the Google expansion project?

Answer 10

• On the Google expansion project the contractor was occasionally late with providing firm costs for change orders that had been raised.
• Therefore in order to be pro-active I set budgets for these changes myself to ensure accurate cost reporting was maintained on a weekly basis.