Project Finance Flashcards
What has the rate of inflation in UK construction been over the last 3 years?
2022: peaked at10.4%
2023: slowed to 4.6%
2024: 2.6%
Now at 2.5% and expected to rise to 3.8%
What is a cashflow?
A financial planning tool that predicts the flow of cash in and out of a project.
Typically shown month-by-month and for the duration of the project.
How can a cashflow help clients during the construction period?
- It allows the client to understand their financial commitment over the construction period. Can help them understand if any external funding will be required.
- Acts as a check against valuations and can either signify financial difficulties or issues with programme.
How would you produce a cashflow?
Using a cash flow projection or forecast S Curve tool, ensuring the the parameters and past data the s curve is based on is similar.
If possible I would use the total cost of the works and a detailed programme to provide a more accurate version.
In your submission you talk around assessing variations and reporting on the cost. If you had a discrepancy in the valuation of a variation with a contractor, what sum would you include within your cost report?
My assessment of the valuation would be included within the cost plan however I would include narrative around the disagreement as a highlight to make the client aware of what is happening.
What factors can affect a cashflow?
- Retention
- Sectional completion
- Advance payments
- Early material orders
- Defects liability period
Can you tell me what the importance of a cashflow is?
Allows client to understand financial commitment over the duration of the project
Used as a check against valuations and give early indication of financial difficulties
Estimate when extending funding is required
