Project Finance (Control and Reporting) - Level 2

Question 1

Manchester Project - Tell me more about what was included in these monthly valuations and applications for payment you were making.

Answer 1

The monthly valuations were made up of preliminaries, main contract works and variations.

Question 2

How did you deal with changes / variations?

Answer 2

Change under the contract is defined as the alteration or modification of the design, quantity or quality of the Works by the Employers Agent or the imposition by the Employer of any [additional] obligations or restrictions, or the addition to or alteration or omission of any obligations or restrictions.

Question 3

Give me an example where you have implemented procedures to control costs on this project.

Answer 3

I undertook the monthly payment valuations which entailed assessing the value of works completed to date for contract works such as preliminaries and constructions works, as well as variations.

Question 4

Tell me more about the management of provisional sums and risk allowances you are referring to. How were costs controlled?

Answer 4

The costs were controlled by undertaking estimates of provisional items by using rates from previous projects to ensure that the estimate was as accurate as possible.

Estimates of prime costs were undertaken using take-offs from the drawings, such as the reception carpet tile, but an estimated rate was used as the specification of the carpet was not yet provided.

Question 5

Take me through the procedure for producing a project cashflow such as the one referred to in your summary of experience.

Answer 5

The project cashflow was undertaken by inputting the current incomings and outgoings on the project, incomings from the client valuations and outgoings for subcontractors works completed and ISG internal costs and transfers.

Where future incoming and outgoing costs for the next three months were inputted as an estimate based on the programme of works.

Question 6

Tell me about your experience in producing project cost reports.

Answer 6

I have been producing cost reports for the monthly valuation which demonstrate the works completed to date, variations to the contract sum and the value of these completed contract works and variations based on a percentage of works completed.

Question 7

How do these reports help you to control project costs?

Answer 7

These reports help to understand the forecast final account of the project and can therefore assist with controlling and managing costs with the project team and subcontractors to ensure that these forecasts are not exceeded.

Question 8

Tell me about procedures you implement to deal with potential or actual cost overruns.

Answer 8

1. Understand the real reasons why your budget overrun
2. Create an action plan
3. Be responsive to your customers and subcontractors
4. Talk to your team honestly and agree on the priorities
5. Try to retrieve budget, but don’t be greedy
6. Stop works when payments are late
7. Set up cost control system