Project Finance (Control & Reporting) (Level 3) Flashcards
What are the project finance techniques?
o Budgeting and cost management
o Cashflow forecasting
o Financial reporting
o Risk and change management
What is the difference between cost control and cost reporting?
Cost control refers to the process of Monitoring, Managing, and Regulating project costs to ensure that they remain within budgeted limits and align with project objectives.
Cost reporting involves the communication of project cost-related information to relevant stakeholders in a clear, accurate, and timely manner.
As a QS what should you be doing for your client?
o C ost planning and budgeting
o V alue engineering
o P rocurement advice
o C ost control and reporting
How would the number of variations affect the frequency of reporting?
If the volume of variations on a project is such that cost reporting should be carried out at shorter intervals than set out in the consultant’s appointment, then the quantity surveyor should advise the client and seek instruction.
How do you compile a risk register?
o Identify project risks
o Categorise the risks
o Assess impact and likelihood
o Assign risk owner
o Develop mitigation strategies
o Monitor and review
How do you quantify risks set out in the risk register?
Cost estimates may be based on historical data, expert judgment, or parametric models to quantify the monetary impact of risks on project budgets and financial performance. You can use qualitative or quantitative assessments.
Qual = use of experience and experitse to provide judgement
Quan = use of numerical data to provide judgement
What are the key components of a cost/value reconciliation?
o Actual cost analysis
o Earned value of work done to date analysis
o Forecast to complete for remaining activities.
o Corrective actions and mitigation strategies
What is the importance of having a project cash flow forecast?
o Financial planning by estimating the timing and magnitude of cash inflows and outflows.
o Budget management, comparing actual cashflow vs forecasted.
o Mitigate financial risks associated with cashflow mismatches/ funding gaps.
o Supplier management – timely payments
How would you define contingency?
As an allowance or provision included in project budgets to cater for unforeseen events, risks, or uncertainties that may impact project costs, schedules, or outcomes.
What do you understand to be the difference between prime cost and provisional sums?
Prime = Specified materials or goods that the contractor is to provide, for which the exact cost is not included in the contract sum. The cost is reimbursed to the contractor based on actual invoice
While provisional sums are budgetary allowances for works or services that are yet to be fully defined or scoped.
The main difference lies in the responsibility for selecting and purchasing prime cost items (client) versus carrying out works covered by provisional sums (contractor).
How did you prepare the cashflow forecast – what methodology did you use?
- Activity schedule cashflow forecast method.
- Refer to internal financial reporting system for subby payment indication.
- Add the liability to a summary sheet.
- Compare against predicted payments to be made by the client for the inflow.
What are the two types of cashflow forecasts?
Forecast of a company (organisational) and forecast for a project
As well as reporting risk on the project, how do you manage risk?
During our monthly risk meetings, we discuss current risks and new risks.
We review the current risks and assess their status and whether any additional mitigation is to be implemented.
For new risks we will assess the likelihood and potential impact, the mitigation techniques and further allocatee contingency.
How do you compile the forecast cost to complete? How do you assure yourself that it is correct?
o Actual cost data into forecast for review and analysis
o Forecast cost updated in line with programme.
o Update with relevant members to each cost header.
How did you manage expected changes in the FTC, how did you ensure you were aware of them?
- Ensure they’re correctly calculated.
- Input into the next FTC revision.
- Clear explanation for the client.
- Apply risk if there is any.