Project Finance Flashcards
What is the difference between cost control and cost reporting?
Cost control is managing a project to ensure it completes on within the approved budget, whereas cost reporting will ensure at all times the employer is receiving the best estimate of the project cost to date and the anticipated final cost of the project.
As a QS what should you be doing for your client?
- Managing risk allowance expenditure
- Initiate action to avoid overspend
- Prepare pricing documents for tendering
- Manage tendering process
- Evaluate and analyse tender bids
- Prepare interim valuations
- Value variations and compensation events
- Negotiate and agree final accounts
- Issue financial reports
- Prepare and maintain cash flow forecast
How would the number of changes affect the frequency of reporting?
Changes can arrive through various avenues, this can be due to site conditions, design changes and employer changes, if there are multiple changes, it would be wise to advise the client at more regular intervals to ensure he is aware of the costs and can make informed decisions.
Would it not be better to prevent/mange the changes rather than just report on them?
Yes, that is always the preferred option, however on the projects I work in there is sometimes numerous client changes and they would like to know costs before they proceed.
How do you compile a risk register?
To compile a risk register you must first identify the risks. Once identified they must be categorised and assessed with regards to likelihood and impact. This can be ranked from 1-3 or 1-5, with the higher number reflecting the most likely and most impact. The rankings are then colour coded accordingly with the greater numbers in red, for example if an activity is highly likely this is categorised as 3, and high impact another 3 which is an overall score of 9.
What is the importance of having a project cash flow forecast?
It is important to have a cash flow, so the client/developer can secure funding for the project, or like our residential projects the client has the correct amount of money in the bank for each monthly payment.
What information would you provide in your cost report?
- Contract sum
- Adjustment of variable costs
- Adjustment of variations
- Adjustment of fluctuations
- Claims for loss and expense
- Adjustment of risk allowances
How would you define contingency?
An amount of money reserved to cover unforeseen project costs
What do you understand to be the difference between prime cost and provisional sums?
Provisional sum – provisional allowance is an allowance or estimate included within a contract price when the scope is undefined.
Prime cost is a cost included as a unit rate, where the specification is unknown and is an estimated cost for supply only. PC sum will exclude installation costs.
What current challenges is Covid and/or Brexit bringing to Project Finance?
Current challenges are price increases which is making it difficult for QS’s to manage construction budgets and fluctuations.
