Project Finance Flashcards
How do I manage costs during the construction phase
Using the activity schedule, I create a forecast. I layer resource costs and risk as well onto this to create a comprehensive forecast.
Following that, I during my weekly progress meetings with Contractors, I verify activities completed to gain an understanding of Value of Work Done. I use this to assess how much value has been delivered, as opposed to just what has been invoiced.
I will also conduct site visits to determine what exactly has been completed and what can be paid out.
How do I prepare and present financial reports
I cover 4 main areas:
1. Budget
2. Value of Work Done to Date
3. Estimate to Complete
4. Estimate at Completion
I focus the report on highlighting the changes of VOWD and EAC, the reasons for that, and if there are any escalation points.
For my Large Scale Mains Replacement projects, I would prepare a summary of these items, discuss with the Contractor and challenge them on any items, and then would present this to my client when i was confident.
How to provide effective forecasting of costs and risks
Costs: solid understanding of something like an activity schedule + a programme. Combining them gives a breakdown of expected activity, the value during the month, and when this will be taking place.
Risks: Ensure risks as accurately captured, analysed and assigned first. I like to assign risks to programme activties. E.G on my PAVA replacement project, a risk was that there would need to be additional resource procured to facilitate extra work taking place. In my forecast, I assigned this value to that months expected cost.
Using cashflows in financial management
Cashflows are a financial statement showing cash in and cash out. These can be used to assess the health of an organisation, and are used especially in the tender stage. Specifically to determine if a Contractor is financially health and/or may be at risk of liquidation.
How do I maage provisional sums and risk allowances
Actively. Once receiving the costs from the Contractor containing any provisional sums, I ensure they are accurately separated and tracked. I ensure there is a process in place for confirming any provisional sums, and update my tracker accordingly.
Risk allowances similarly.
How have I controlled finances on my projects
I have been wholly responsible for managing the financial aspects of many of my projects. This included accurately forecasting spend, risk allowances, confirming invoices and others.
Have I used cost-value reconciliation
Yes. CVR is comparing actual cost vs planned cost to determine if you are ahead, on track, or behind from a cost perspective.
I use this when gathering VOWD on my projects and comparing it to my original forecast.
Reconcile accrual during financial reporting
Large Scale Mains Replacement: There was a significantly higher amount of work expected to be invoiced than actually was. This was very puzzling to me, as I had been to site and seen the work completed, so it wasn’t as if the work just hadn’t happened.
I conducted a session with the Contractor to identify what the issue was, and it was as simple as they just hadn’t been invoicing for certain completed items. I instructed them to do the invoice.
Costs come through but not in my forecast
This has happened before due to a shared time-booking system the client was using that automatically assigned cost. There were people booking time to my project coe that I did not recognize, which caused the expected spend to be higher.
I spoke to these people and instructed them to confirm they were NOT working on my project, and to book their time elsewhere. I worked with the clients finance team to move the costs to the correct homes.
Developed cash flow statement for a construction project
Cash in: budget
Cash out: contract sum, design costs, fees, resource cost
Over measure during work
Ningwood Mains Replacement: initial estimate showed 5km of pipe being required. Following this, actual amount was closer to 3km. This was part of a programme, so the budget that was not required was moved around.
If this was a stand alone project, I would have waited until closer to project completion for the budget to be removed.
Under measure for work
Level 10 Refurbishment: Architect specified 20 height adjustable desks in their furniture schedule, and this was used to estimate costs. Upon further inspection, the drawings actually contained 30 height adjustable desks. This was absorbed by the contingency for the project, but should this not have been doable, I would look to reduce scope, search for re-usable desks or other methods.
