Project Finance (Level 3) Flashcards
What are the contents of a cost report?
Current costs; CSA
Variations both instructed and anticipated
Loss & Expense
Prov sums both expended and unexpended
Cashflow section
Risk items section
Contingency drawdown
Current valuation snapshot
Final outurn cost
What is a cashflow?
A cashflow shows the predicted expenditure of the project over the duration of the works. This can be done pre and post contract. It typically takes the shape of an S curve.
How would you produce a cashflow?
I would typically produce a cashflow in pre contract stages. I would take my latest cost plan and benchmark against the project managers programme when key packages are likely to occur.
I would then account for items such as retention and any advance payments.
What could it indicate if a contractor is ahead on cashflow?
Possible ahead of programme and making positive progress, possible to have advance payments that weren’t previously captured, possible front loading from the contractor, original cashflow have been inaccurate.
What could it indicate if a contractor is behind on cashflow?
Possible delays on project. Possible resequencing of works. Advance payments previously accounted for not required.
What is the difference between a defined and undefined provisional sum?
Defined provisional sums are included into the contractors works programme whereas undefined there isn’t enough information.
Why is it important to manage cost both pre and post contract?
Pre contract cost management is essential to make sure that the tender returns are close to the budget allowance.
Post Contract is important as any unexpected changes can be identified early, and changes can be made to keep everything running smoothly and to budget.
What can the architect do if the contractor does not comply with an instruction?
- This depends on the form of contract being used however under JCT Suites if the contractor does not follow an instruction, the architect will be required to issue a ‘notice to comply’ to the contractor.
- If the Contractor still fails to comply, the architect can instruct another party to carry out the work and the contractor will be liable for any additional costs incurred.
- In this circumstance it is important to record the costs and obtain a range of quotations.
What 3 methods are there of obtaining a cost for variations under JCT forms of Contract?
- This depends on the form of contract being used, under JCT SBC, quotations can be made by:
- Agreement between the employer and contractor.
- A schedule 2 quotation.
- Valuation by the QS under the valuation rules.
What are the time periods for Schedule 2 quotations under JCT SBC?
o The architect should request via issue of an AI.
o The contractor has 7 days to notify that they will not provide one.
o If not, they have 21 days to provide the quotation.
o The architect then has 7 days to confirm in writing the acceptance or rejection.
o The acceptance is called the ‘confirmed acceptance’.
What costs does the schedule 2 quotation contain?
- Value of the work.
- Any adjustment of time.
- Money in lieu of direct loss and expense.
- The fair and reasonable cost of preparing the quotation.
What costs is the contractor entitled to if the schedule 2 quotation is rejected?
The fair and reasonable cost of preparing the quote, as long as the quote itself was fair and reasonable.
What is a star rate?
- A rate that is based on the bill rates but includes a fair allowance.
- To deviate away from the bill rates there must be a reason as to why the star rate is being adopted.
- This may be because the conditions on site for installation are more complicated that first envisaged.
What are dayworks?
The prime (actual) cost of all the materials, labour and plant used in carrying out the work, along with a percentage additions to each category as set out in the contract.
What document should the prime cost be calculated in accordance with?
This should be calculated in accordance with the ‘Definition of the Prime Cost of daywork carried out under Building Contracts’ published by the RICS.
