Project finance (control and reporting) (L3)

Question 1

On the Williamsgate project, how would the items in your suggested claims and issues log be dealt with?

Answer 1

• Similar to loss and/ or expense claims
• Typically, the client/ UU has instructed that Contractor notified CEs are excluded from the cost report
• However, given the number of Contractor notified CEs that the PM did not consider to be CEs which were Escalated
• I recommended that this be captured in a claims and issues log that would accompany the cost report each month
• This would then allow the Project Controller to make a separate allowance in CPMS for these issues
• Where allowance was made for an item I set out the basis on which the assessment was made i.e. average operator rate multiplied by number of operators over the applicable period

Question 2

Would this not just be a risks section?

Answer 2

• The Contract was an Option A and so the Employer will only pay the total of the Prices and so there is no risk section in the cost report that is provided to the Project Controller
• However, due to the number of Contractor notified CEs that were escalated it was prudent to suggest that we report these matters in a log to accompany the cost report
• Such allowances would then have been included as a risk in the report controlled by the Project Controller

Question 3

How does your report deal with unagreed CE’s?

Answer 3

• They are identified separately from the implemented CEs both in relation to the forecast total of the Prices and the forecast final PWDD
• If there is a difference in the assessment of the CE, the difference is reported in the cost report.
• However, the outturn cost report is based on the QS/PM assessment.

Question 4

Can you tell me about a specific risk that you managed,

Answer 4

• On the Watchgate project, there was a risk associated with the commissioning of the chlorine system due to the unique arrangement
• The impact would involve additional temporary work, manual sampling and further commissioning resource support
• This risk was built up and a probability assigned
• This risk was then profiled out for the duration of the commissioning period
• However, the Contractor was not progressively releasing this risk through the commission period
  Or
• On the Williamsgate project, we were hiring pumps via a CE to the Contractor
• Due to difficulties in obtaining a permit the hire of the pumps kept being extended
• Given the tight budget I highlighted the cost risk associated with the continued hire of these pumps
• To mitigate this risk I suggested that it may be cheaper for the Employer purchase the pumps if we believe the pumps will be required on a long-term basis

Question 5

Can you tell me about advice you gave to the client in terms of a specific risk?

Answer 5

• On the Watchgate project, there was a risk associated with the commissioning of the chlorine system due to the unique arrangement
• The impact would involve additional temporary work, manual sampling and further commissioning resource support
• This risk was built up and a probability assigned
• This risk was then profiled out for the duration of the commissioning period
• However, the Contractor was not progressively releasing this risk through the commission period
• I advised of the impact this has on the Employer in that it ties money up which could be used for capital expenditure outside of the project or reapplied to enhance the project
  Or
• On the Williamsgate project, we were hiring pumps via a CE to the Contractor
• Due to difficulties in obtaining a permit the hire of the pumps kept being extended
• Given the tight budget I highlighted the cost risk associated with the continued hire of these pumps
• To mitigate this risk I suggested that it may be cheaper for the Employer purchase the pumps if we believe the pumps will be required on a long-term basis

Question 6

What techniques are available for managing risk?

Answer 6

• Use of a risk register
• Risk avoidance – measures to avoid the risk
• Risk reduction – measures taken to reduce either the chance or impact of the risk
• Risk transfer to the contractor – or to another party able to control it more effectively
• Risk sharing by both employer and contactor
• Risk retention by the employer – with appropriate risk allowances

Question 7

What would affect the choice of reporting regime/ protocol on a project?

Answer 7

• Client – some may have specific formats
• Contract type – will dictate the format and items to reported
• Duration of a project – shorter projects may require a weekly reporting cycle
• Volume of variations – may necessitate more frequent reporting
• Timing/ availability of cost data – cost reports usually prepared in conjunction with the payment cycle