Project Finance Flashcards
What is the benefit of a cost report?
- Provides a snapshot of the financial health of a project
- Puts the Client in an informed position to make commercial decisions
- Acts as a value management tool to ensure the Client is getting best value
How is a cost report laid out?
Cover Page
Contents
Dashboard – Overview of the document
Summary – Shows changes in the period in more detail
Provisional Sums
Approved Changes
Anticipated Changes / Early Warnings
Claims
Cashflow
What are the timescales of agreeing a final account under the JCT D&B 2016?
Contractor to provide all remaining project information required of them no later than six months after the PC Certificate.
Final Account to be agreed no later than 3 months after receipt of this information.
Two months after the 3 month period the PQS can make their own assessment. If the Contractor disagrees they must file a dispute.
What makes up a final account statement?
Summary
Summary of Changes
Summary of Extensions of Time and Associated Works
Final Account Statement denoting balance outstanding (if any)
Signature page to agree the final account statement
What is a loss and expense claim and what is an extension of time claim?
EoT – when delay to progress has occurred as a result of a Relevant Event.
L&E – when actual loss has occurred as a result of a Relevant Matter.
What is a cash flow?
A financial tool for predicting the flow of cash in and out of a project or organisation.
How would you produce a construction cash flow?
You put the cost of the work packages against the programme.
A typical construction cash flow follows and S-Curve as the high value packages (subs and frame, façade and M&E) will be let by the midpoint, with the low value finishing packages to be let at the end.
What does it indicate if a contractor is ahead of the cash flow?
They may be front-loading/overclaiming on their application.
What does it indicate if a contractor is behind on the cash flow?
They may be behind on their works or be in financial difficulties.
Talk me through the variation and contingency trackers used on ALB and on 5SP?
Document showing the Client’s budget against the construction costs, giving the contingency for the project.
Then a table of approved variations and anticipated costs. As costs are added to the table, the actual construction costs increase showing the amount of contingency remaining.
Give an example of reasonable substantiation for a variation?
Quotations from sub-contractors. Dayworks sheets. CSA rates and a measure from a drawing.
What if substantiation couldn’t be provided but the variation was deemed valid?
You would make a fair and reasonable assessment based off of the JCT Valuation Rules.
What is an on-account payment?
A payment where both sides agree a payment is due but cannot be formally agreed under the contract rules.
What is Life Cycle Costing?
Measuring the lifetime costs of a project “from cradle to grave”. Construction costs, likely operating costs and demolition costs.
What is an advanced payment?
Payment ahead of works being completed. Usually to secure materials or start a design process.
