PROJECT FINANCE

Question 1

Why do you think project financial control and reporting is important?

Answer 1

It is key to a projects financial success.
It’s important to keep the client up to date with expenditure/any additional costs within the project as well as making sure yourself and the team are aware of changes or potential costs.

Question 2

What is change control?

Answer 2

A process that ensures potential changes to the deliverables of a project or the sequence of work in a project, are recorded, evaluated, authorised and managed.

Question 3

What do you include within a cost report?

Answer 3

I would expect to see the contract sum included alongside instructed variation, early warnings and expenditure of provisional sums.
I also include a cash flow in my cost plans.

Question 4

You mention a standard change control procedure, can you talk me through this?

Answer 4

CRF (Change Request Form)
Review of CRF by EA and Client team
EA issues instruction if approved

Question 5

What is a final account

Answer 5

Final Statement that settles all outstanding costs of a construction project

Question 6

Why is construction cashflow usually a S-Curve?

Answer 6

Follows the payment procedures, valuation of works after a month
Slow expenditure at the beginning then picks up when substructure is complete and superstructure is constructed

Question 7

What might a cashflow falling behind imply?

Answer 7

Delay

Problems on site

Question 8

What happens at Practical Completion?

Answer 8

1. Half of the retention is released
2. LD’s can no longer be levied
3. Insurance responsibility transfers to the Employer
4. rectification period starts
5. H&S file is passed over to Employer
6. Possession

Question 9

What is the final account procedure in the D&B contract?

Answer 9

1. Contractor submits final statement following award of PC
   (If FS not received within 3 months, employer can give notice that Contractor must submit FS within 2 months or Employer can submit FS)

Question 10

What is included in a Final Account?

Answer 10

Final Statement of contract sum and the variance (If there is one)
Schedule of instructions with costs
Schedule of previous interim payments

Question 11

When is work valued after PC?

Answer 11

On a monthly basis

Question 12

When is the due date for Final Payment?

Answer 12

One month after the following (Whichever occurs last):

1. End of rectification period
2. Date stated in notice of completion of making good
3. Date of issue of final statement

Question 13

How does a QS cost control in the Pre Construction Phase?

Answer 13

Outline budget updates in cost plans and cost reconciliations

Question 14

How is a provisional sum expended?

Answer 14

Contractor quotation
recommendation
instruction to proceed
PS omitted and new cost added to CS

Question 15

What should you consider with regards to time in a cost report?

Answer 15

Should track time and if there is a delay if the the differing parties are entitled to:

1. Contractor - EoT
2. Employer - LDs

Should be an advanced warning in cost report

Question 16

What are prolongation costs?

Answer 16

Additional costs due to a delay that was caused by another party.
Typically these are:
time related resources such as site management, site accommodation and key items of plant and machinery.

Question 17

What would you say to a Contractor that had fallen behind on programme?

Answer 17

• Understand why
• Identify to the client that if they fail to proceed “regularly and diligently” it could be grounds for terminations
• Ask for a recovery programme
  Pro-rata prelims payments based on level of work complete rather than weeks complete