Project Finance (Control & Reporting)

Question 1

What Is a Post Contract Cost Report

Answer 1

Document that is produced periodically that sets out the financial position of a project

Question 2

What is the purpose of a Post Contract Cost Report

Answer 2

To enable the client to make informed decisions

Question 3

What is included within a cost report

Answer 3

Variations
Provisional Sums 
Valuations
Anticipated Final Account
Forecast Cash flow V Actual Cash flow
Advanced Warnings 
Any Claims

Question 4

What is a cash flow

Answer 4

A cash flow distributed construction costs in to monthly forecasts in accordance with the contractors construction program

Question 5

What Shape is a cash flow curve

Answer 5

‘S’ shaped, Slow start at the beginning of the project and lower costs towards the end of the project

Question 6

What could it mean if the actual cash flow is above the ‘S’ curve

Answer 6

Contractor working slower then anticipated
Re-sequencing of work
Poor financial Health
Difficulties in securing labour/materials

Question 7

What could mean if the actual cash flow is below the ‘S’ curve

Answer 7

Acceleration

Materials delivered to site ahead of time

Question 8

What is a change/variation

Answer 8

An alteration to the scope of works in a construction contract
Impact on cost/time/qaulity

Question 9

Contractor led change procedure

Answer 9

• Change request for issues by contractor
• Client team review (design/cost/program)
• Design team sign off
• EA/CA has 7 days since CRF to instruct
• CRF log updated
• Design & construction proceed in accordance of the instruction

Question 10

Client led change procedure

Answer 10

• Change request for issues by Client
• Contractor to produce design, cost and program implications
• Design team sign off
• EA/CA has 7 days since CRF to instruct
• CRF log updated
• Design & construction proceed in accordance of the instruction

Question 11

What procedure is used when the client wants to find out implications before instructing

Answer 11

Variation Quotation Procedure / Schedule 2 Quotation

Question 12

Explain the process of the Variation Quotation Procedure / Schedule 2 Quotation

Answer 12

1. CA/EA provides information to the Contractor (similar level to tender stage) to allow them to
   prepare a quotation for the works
   o This typically includes the statement that at least 3 sub-contractor quotes must be
   sought to ensure competition and value.
2. The contractor has 7(SBC)/10(DB) days after receiving the information to notify the CA/EA if
   he will provide a quote or if he requires additional information
   o If additional information is required the contractor shall not be obliged to provide a
   quotation and the variation shall not be carried out until further information from
   the CA/EA
3. Once the Contractor has all the information required he can provide a quotation to the
   CA/EA or QS. Quotation to include:
   o Amount of adjustment to the contract sum including preliminaries (but excluding
   loss and/or expense claims)
   o Details of any time adjustments (extension of time) to the programme
   o Any details of loss and/or expense claims
   o A fair and reasonable cost for preparing the quotation
   o Base date for the valuation of the works
4. Costs must be submitted 21(SBC)/14(DB) days after whatever occurs last out of the receipt
   of instruction or receipt of additional sufficient information if requested
5. CA/EA has 7(SBC)/10(DB) days from the receipt of the quotation to either accept the
   quotation or withdraw the instruction
6. If the Employer withdraws the instruction the Contractor is still entitled to the reasonable
   cost of preparing the quotation/estimate

Question 13

What is Loss & Expense

Answer 13

A means for the contractor to recover/be reimbursed of any direct loss and/or expense
incurred because the regular progress of the Works or any part of them has been or is likely
to be materially affected by any Relevant Matter/by the Employer.

Question 14

What is the process for Loss and/or Expense

Answer 14

1. Contractor must give written notice to CA/EA as soon as the likely effect of a Relevant
   Matter becomes reasonably apparent.
2. Notification shall be accompanied with/followed by the Contractor’s initial assessment of:
   o Particulars of the expected effects of the Relevant Matter
   o Estimation of the ascertained amount of loss and/or expense that he has incurred or
   will incur (Heads of Claim)
   o Necessary information for the CA/EA/QS to ascertain loss and/or expense.
3. CA/EA determines whether any delays or loss and/or expense claimed are caused by
   Relevant Matters.
4. Contractor updates assessment and information at monthly intervals until all information
   needed by the CA/EA/QS to ascertain the total loss and/or expense is supplied.
5. CA/QS have 28 days of receipt of initial assessment and 14 days of each subsequent monthly
   update, to notify the Contractor of the ascertained loss and/or expense incurred

Question 15

How many days does the CA/EA/QS has to respond to respond of receipt of the initial assessment

Answer 15

28 days