Project Finance and Cost Control Flashcards
What do you prepare a cashflow?
Follows the principles of an S curve
Pre
Programme vs Anticipated Cost
Post
Programme vs Contract value
Contractors cashflow
What is the purpose of a cashflow? Who produces one and how?
For client:
- To monitor progress against agreed programme
- To be able to monitor loan payments and withdrawing money from funder
- To manage resources
For contractor:
- To monitor subcontractor’s progress against subcontractors
- To manage resources
What are the factors contributing to cost control?
- Changes to original scope to a project
- Fluctuations on a project
- Loss and Expense claims
- Management of provisional sums
What is a prime cost sum?
Budget which should be expended on the supply only costs for materials or goods.
Can you tell me what the some of the risks on a project are?
- Ground conditions
Asbestos Containing material (for refurb project) - Site access
- Existing underground services
- Existing M&E services (for refurb projects)
What is risk allowance?
Contigency added to the base cost estimate for items that cannot be precisely predicted to arrive at the cost limit
What are provisional sums?
A provisional allowance made for an item of work that could not be determined at tender stage.
What is the different between a defined and undefined provisional sum?
- Defined provisional sum – works included in programme.
Undefined provisional sum – works not included in programme.
On your HRA Phase 4 Project – How did you go about managing the provisional sum for the project?
I Record all PS in the cost report. Once a firm cost has been provided for the project. I assessed the cost and omitted the provisional sum and replace this with the firm cost.
How do would you asses a variation on a project?
I will look at the scope of works, and check that the quantities provide by the contractor are accurate. I will then check if there are any agreed rate that the contractor should be using. I will also check if there are any recent quotation obtain where I can benchmark the cost against. I will also review the breakdown to assess whether the contractor has allowed for elements with are above to what is required.
What is the purpose of cost reporting?
To record all known costs which can be accurately valued
To report all costs which are known and can be estimated at the date of the report
To forecast costs as can reasonably be foreseen at the date of the report
risk allowances necessary as can be reasonably foreseen at the date of the report.
What is cost control?
The process of valuing and managing changes. To ensure the project is delivered at the right price and to manage the final account
How would you prepare a final account?
- Check the contract procedures for final account including the timescales.
- Ensure to resolve all the variable costs (changes, loss and expense, liquidated damages, prime costs, dayworks, provisional sums).
- If there are any disputes which cant be resolved in any other way, the statutory obligation is to go to adjudication.
How do you control costs pre and post contract?
PRE
- Cost Plans
- Value Management
- Cost Tracking
POST
- Cost Reports
- Valuations
- Variation
What would you advise your client if your behind on a cashflow?
- Behind on programme
- Resequencing of work
- Weather
- Sourcing of subbies
What if your contractor are overclaiming on their valuations and against their cashflow?
It could show:
Poor cashflow of contractor
Financial concerns to recoup cash
What is a cashflow?
Show the predicted flow of cash going in and out of a project
What is the difference between a employer cash flow and a contractor cash flow?
Contractor cash flow will typically show construction cost
Emplyoer cash flow usually consider the the orject in a broad context, might include cost such as?
- Consultant and legal fees
- Financing
- Marketing a sales charges
- Statutory authority charges
How will the employer benefit from accurate cash flow?
- Assist with planning expenditure, ensuring appropriate funding is in place
- Sense check for monthly contractor valuations
- Allows the employer to gain an understanding of the potential financial commitments at a specific point in the future
- Enable the employer to plan and anticipate for periods of cash shortage and take corrective action where necessary.
If a contractor is behind on cashflow, what might this indicate?
This could mean they are behind on programme
If a contractor is ahead on cashflow, what might this indicate?
The contractor is over claiming
What is the purpose of post contract cost report?
- To provide an overview of the client’s financial commitment
- To inform the client of the likely out turn cost of the project account for variations, anticipated instructions
- To give the client an understanding of the potential savings or additional money required
What information would you include in a post contract cost report?
- Executive Summary
- Contract Sum
- Instructed Variations
- Anticipated variations
- Claims
- VE options
- Cashflow forecast
- Total certified payments
What is the difference between cost and price?
-Total price for labour, plant and equipment
- Include OH&P and is the amount the employer will ultimately pay for the work.
