Project Finance (Control and Reporting) Flashcards
What are the different types of provisional sum?
Defined - sufficient information to allow the contractor to include for prelims and programme.
Undefined - contractor has not allowed for prelims and programme, therefore may be entitles to an extension of time / loss and expense.
What is usually contained within a change control register?
- Change reference
- Date change is raised
- Details of the change
- Reasoning for change
- Cost Impact
- Programme Impact
- Source of funding
- Change status
How would you produce a cashflow?
Using a cashflow projection or S Curve tool and adjusting for abnormals and retention.
Pre-contract - should be avoided as difficult to predict
Post Contract - request from main contractor
What is included in pre-contract cost reports?
- Executive summary
- Narrative on latest financial position based on cost plans
- Outstanding information
- Value Engineering
- Risk and opportunities
- Market conditions
What would you include in a post contract cost report?
- Executive summary
- Overview of current financial position and change in the period
- Risks and opportunities
- Change control register
- Provisional sums
- Contingency position
How are variations managed from a cost perspective?
Following the valuation rules:
- Additional or substituted works should have consistent values with similar items already included within the contract sum
- If no similar items included, a fair and reasonable valuation should be made
- Once a sum is agreed an EA/CA instruction would be issued and the contract sum is adjusted
What is a cashflow and how can it aid clients?
A financial planning tool to show the expenditure of a project throughout the contract.
It aids the client by helping them planning their draw down and planning their funding.
Can aid in checking against valuations to highlight issues.
What may impact a cashflow?
- Retention
- Partial possession
- Materials on site
- Variations
- Public holidays
- Advanced payment
How do you establish a cost reporting procedure with your client’s?
Establish what their requirements are in terms of how often they would like to see formal cost reports.
Also if they would like any meetings to run through reports or informal touch-point meetings in the interim.
What is the correct contractual procedure for managing provisional sums within the contract?
EAI/CAI issued to expend the provisional sum, this is then omitted from the contract and the actual cost added back into the contract to form part of the agreed final sum
Can you provide an example of a time you’ve produced a cashflow for a client and talk me through how you did this?
Taken the anticipated cost and the anticipated programme duration and enter them into an S Curve formulas where the parameters are set by past project information
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.
