Project Finance Flashcards

1
Q

What is the purpose of post contract cost reporting?

A
  • Client can see their financial position
  • Ensuring scheme is monitored to see if it is due to be over or under budget
  • Client can understand their rolling final account, which may assist them to make informed decisions
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2
Q

Name some effective post contract cost control mechanisms

A
  • Interim valuations
  • Change procedures
  • Cost reports
  • Cash flow forecasts
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3
Q

How would you create a cash flow before the contractor was on board?

A
  • Look at the programme and cost plan
  • Align cost components against programme to provide a cash flow for the works
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4
Q

How would you create a cash flow for a project where you had no programme data?

A
  • I would at least have a duration as this would inform preliminaries
  • I would use DHSS model to provide a smoothed “s” cash flow over the anticipated duration of the project
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5
Q

What are the different cash flows in construction?

A
  • Contractor / Construction cash flow: Cash flow for construction and preliminaries only
  • Employer cash flow: Cash flow for construction, prelims, professional fees, direct costs etc (wider project costs)
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6
Q

What are the benefits of forecasting costs? How does this help the Client?

A
  • Ensures if there are any areas where there might be a cash shortage is addressed and rectified early
  • Assists the client in preparing their accounts to ensure cash is available to pay contractor
  • Can help them make informed decisions with regards to changes
  • Can be compared to monthly valuations as a sense check
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7
Q

How can cash flows assist with determining site progression?

A
  • Compare with monthly valuations to see if they are ahead or behind programme
  • Helps address the issue and understand why the scheme is ahead or behind forecasted progress
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8
Q

If you detected the scheme showing an overspend, how would you advise your client?

A
  • Could advise them to value engineer some remaining elements of the scheme
  • If there are any change requests from client led changes, look at reviewing whether they are a necessity to the works
  • Look at reducing the remaining scope to ensure the project can still be delivered
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9
Q

What if your Client said they could no longer afford the scheme?

A
  • Consider the extent of not affording the scheme, i.e if they’re short in cost or funding has been pulled
  • Look at value engineering or reducing the scope
  • Possibly look at termination of the building contract
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10
Q

What are effective cost control mechanisms?

A
  • Pre contract this can be OCE’s / CP’s / PTE’s / VE
  • Post Contract this can be cost reporting / valuations / EW’s / compensation events / cash flow forecasting
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11
Q

How does post contract cost reporting help your client comprehend their rolling final account?

A
  • can see what has been expended against the contract sum analysis / activity schedule / BOQ’s
  • can see cost of approved and anticipated changes to see remaining contingencies
  • if a Target Cost, can see where the contractor is likely to complete at, which can demonstrate whether there is any overspend and the % they may have to pay on top of that
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12
Q

What did you include in your cost report for 71/72 The Kingsway?

A
  • Executive summary
  • Commercial overview
  • Any changes in the period
  • Approved CE’s
  • Anticipated and Disputed items (anticipated includes for EWN’s and NCE’s)
  • Schedule of instructions
  • Provisional sum adjustments
  • Cash flow
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13
Q

How did you go about providing estimates for EWN’s and NCE’s?

A
  • Used previous information submitted by the contractor to provide indicative cost
  • Considered the works and possible resources required
  • Provided estimate + fee %’s
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14
Q

For Oak House, why did you have a monthly target cost tracker which showed the latest cost plan against the returned packages?

A
  • Cost Plan RIBA 3
  • Client requested this for themselves as part of my cost report so they could reconcile the costs received from the contractor back to the cost plan
  • Client wished to reconcile back as this was their latest budgetary sign off, so they wanted to see how their budget was tying to the progress / cost of works
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15
Q

Can you provide an example of a time, on The Kingsway, you have estimated the ramifications of design works?

A
  • E Bike Charging Points
  • Design works undertaken to incorporate electronic bike racks into the building
  • I reviewed the electrical drawings and understood additional power would be required to the storage room
  • I calculated the works to be undertaken, and any potential resource thickening the contractor would claim, added the fee % on and included this cost in the anticipated CE’s section
  • Therefore, should the design be accepted by the Client, the cost of the whole works would be captured within the clients forecasted contingency expenditure
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16
Q

For your role at TfL cost manager support, why would you advise your client to offset costs in alternative accounts?

A
  • Some costs were mistakenly raised against the cost code and needed rectifying
  • Each month I undertook due diligence by reviewing the works that have been done to the expenditure in the financial system
  • If costs were incorrectly assigned, these could be journalled to the correct place to ensure my client could see their realistic expenditure for a project
17
Q
A