Project Finance Control and Reporting

Question 1

What is a cost report?

Answer 1

Used to monitor and manage cost throughout the project

Question 2

What is included in a cost report?

Answer 2

Contract sum total
Value of instructed and potential variations
Ongoing claims
Provisional sum adjustments
Anticipated final account total
Total of certified payments

Question 3

What is a cashflow used for?

Answer 3

Planning tool that shows the predicted flow of cash in and out of a project
Shows if a project is running ahead / behind programme
Once construction is underway the cashflow projection will typically form an S Curve

Question 4

Contractor cashflow

Answer 4

Will typically show construction costs (material, labour and plant)

Question 5

Employers cashflow

Answer 5

Will consider most elements of a project including, legal fees, statutory fees

Question 6

Benefits of an accurate cash flow projection

Answer 6

Provides an early indication of financial difficulties if actual expenditure is lagging behind forecast
Ensures appropriate level of funding is in place for future payments

Question 7

If payment to the contractor are behind the projection, what might this indicate

Answer 7

Indication that construction works is behind the programme (delays)

Question 8

If the contractor’s monthly valuation is ahead of the cash flow projection, what might this indicate

Answer 8

Project is ahead of programme or contractor is overclaiming

Question 9

Life Cycle Costing (LCC)

Answer 9

A method for measuring and managing the lifetime costs of a project

Question 10

Key advantages of LCC

Answer 10

Long term value - ensures the project has the highest possible value

Question 11

What is a variation?

Answer 11

Alteration or modification to the design, quality or quantity of the contract works

Question 12

Why does a variation arise?

Answer 12

• Change in spec
• Discrepancies between contract docs or statutory requirements
• Errors or omissions
• Deficiencies in employers requirements

Question 13

What is Dayworks?

Answer 13

Method valuing construction work according to the time spent carrying out work, together with the value of the plant and materials resources used

Question 14

What information is needed to be able to assess dayworks?

Answer 14

• Timesheets
• Plant and material used

Question 15

What is Loss and Expense

Answer 15

L&E reimburses the contractor for direct loss and/or expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible

Question 16

Example of loss and expense

Answer 16

• Failure to give the contractor possession / access of the site
• Delays in receiving instruction
• Disruptions causes by works being carried out by the client