Project Finance Flashcards
What would be included in a cost report/financial statement
Exec Summary
Contract sum
Variations
Valuations
Cashflow and s curve
Risk allowances/Contingency
Proposed final account
You have mentioned interim payments, can you please explain the timescales for payments with regard JCT.
(-)7 days - MC issue valuation
0 days - Due date
+5 days - CA Issue payment cert
+ 9 days - Client issue a pay less notice
+14 days - final date for payment
Can you briefly explain how contingency is calculated and develops through the RIBA stages
This typically refers to costs, and is an amount that is held in reserve to deal with unforeseen circumstances.
Often expressed in terms of percentages usually reducing as the project progresses up to contract.
For example:
- 15% at feasibility stage
- 10% in elemental cost plan
- 5% on the contract value
Covers 4 main areas of risk;
1. Design Development Risk
2. Construction Risk
3. Employer Instruction Risk
4. Employer Other Risk
What is a provisional sum
If employer is unsure if works are to be completed so can be taken out.
Where works are programmed and will be performed but there is a lack of design or information to price accurately.
What is the importance of a cash flow forecast?
Checks budget
Forecast final account
Track progress against cashflow
How would you manage the costs on a risk register as a project progresses?
Release contingency according to cashflow as risks are realised / not realised
What is the difference between a defined provisional sum and undefined provisional sum
Defined must be allowed for in the programme
What is the purpose of providing clients with financial statements?
Advise on project expenditure to enable them to make financial decisions and stay informed with project changes, documents our advice
What are the JCT Standard Form ‘Valuation Rules’?
Contract Rates: where work is of similar ‘character’ to work in the original Contract Documents then the valuation of the variation shall be consistent with rates, prices or amounts of work in the proceed document.
Fair Rates and Prices: Where work is not of a similar ‘character’ then it should be valued at ‘fair rates and prices’.
Dayworks: Method of valuing work which cannot properly be valued by measurement.
Contractor’s quotations
How are prelims dealt with in valuations
Broken down into fixed costs and time related costs and assessed as such rather than a %.
How is retention dealt with in valuations
Retention is deducted as per the retention bond value in the contract docs. Retention is halved once PC is reached.
How are prov sums dealt with in valuations
If the works have been completed that are associated with the prov sum and the works formally instructed they can be included.
Considerations when advising client on Cashflow
’- Holidays and cyclic events such as winter weather
- Retention (including static end for defect rectification period)
- Certification Period (Due Date to CA issuing payment cert)
- Payment Period (Payment Cert to Payment) - usually 14 days
- Sectional completion/partial possession (individual s curves and retention releases)
- Risk (either spread over S curve or using dates on risk register)
- Prov sums (these are a risk as could be over or under the value and make the cashflow in-accurate)
- Fees and development costs (Consultants fees, direct costs, VAT, materials on site)
Reasons for variance in Cashflow
Lower
- Site conditions
- Adverse weather
- Programme issues
- Various delays
Higher
- Front end loading
- Variations
- Ahead of programme
- Distressed contractor
- Cashflow not accurate
What would you include in a cashflow in addition to the direct cost of the works?
Retention
Variations
Prov Sums
VAT (maybe but complicated)
Materials on site