Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

RICS APC Preparation > Project Financial Control and Reporting > Flashcards

Project Financial Control and Reporting Flashcards

1
Q

What is receivership in administration?

A

Receivership is a process in which a creditor assumes ownership of a debtor’s business operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the position on insolvency in an NEC contract?

A

Section 9 - Termination
Employer may instruct the contractor to leave site and remove his equipment, materials etc., assign subcontractors
Employer may use the Contractor’s plant and equipment to complete the works
Amount due includes amounts assessed as for normal payments plus other defined cost reasonably incurred in expectation of completing the works, less the forecast of additional cost to the employer of completing the works

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What’s CVA?

A

Company Voluntary Arrangement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Why would a contractor opt for CVA?

A
  • Directors remain in control
  • Costs involved are cheaper than going into administration/receivership
  • No requirement to tell customers/to go public
  • Creditors are prevented from threatening or taking legal action against the company as long as the agreed terms are adhered to
  • A CVA avoids company liquidation and, therefore, requires no investigation of directors’ conduct leading up to insolvency.
  • 75% of creditors have to agree to it
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What would you do after a contractor goes into liquidation?

A
  • Secure site
  • Value works on site
  • terminate contract
  • invoke performance bond (if applicable) to cover losses
  • KEEP SITE INSURED
  • Use retention to cover losses
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What EXTRA costs would the client have to cover if the contractor goes insolvent?

A
  • Prelims for setting up site again
  • site security
  • costs associated with delays (loss of income)
  • insuring vacant site
  • professional fees
  • make good any damages
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What’s the difference between liquidation and administration?

A

Liquidation is the process of bringing a business to an end and distributing its assets to claimants

Administration is a very powerful process for gaining control, when a company is insolvent and facing serious threats from creditors. The Court may appoint a licensed insolvency practitioner as administrator. This places a moratorium around the company and stops all legal actions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How can you avoid a contractor going into liquidation?

A

Do financial due diligence before appointment to ensure they have the financial capacity/cashflow to run the project

Pay contractor on time

Keep on top of variations

Have a retention bond instead of holding retention

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Is retention good?

A
  • It does a job of protecting the client
  • However it is bad for cash flow for the contractor and ultimately if they fall into liquidation that is an issue for the client
  • Retention bond can replace retention however will come at a premium for the client
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How did you negotiate your final account?

A
  • Ran rolling FFA
  • Any unagreed CE’s negotiated in the FA meeting, using prepared evidence and records to support my case.
  • Statement of Final Account signed by both parties and final payment issued.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is retention?

A

It’s a contractual mechanism that holds back a %age of interim payments to the contractor

This is used to protect the client in the case the contractor fails to fulfill his obligations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How do you decide on retention amount?

A

Project specific

Generally smaller/riskier project will have higher retention amount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the default retention &age in NEC?

A

To be determined by the employer via contract data part 1. In my experience typically 5%.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a retention bond?

A

A performance bond that protects the client in the case the contractor fails to fulfill his obligations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How are retention bonds utilised in the case of non performance?

A
  • On demand (not often used)

- Conditional

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What was a change on the Dulwich project that the client was responsible for?

A

Extra scope, e.g. new rooms to be decorated, access control on doors where it was not specified within ERs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What was a change on the Dulwich project that the contractor was responsible for?

A

Design development e.g. anything that was in the ERs that they have just developed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is change control?

A

The administrative process that implements the contract mechanism for instructing change.

MUST adhere to contract requirements for notification & approval of change

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What does effective cost control require?

A

Agree variations as they come out, rolling final accounts

Cost Reports to monitor progress

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

How do you control project costs pre contract?

A
  • Between cost plans we run change trackers
  • As design develops we review drawings/releases or pick up on things in meetings
  • Prepare cost uplift/reduction estimate and add it to the tracker
  • Present to the client every 2 weeks advising new likely outcome of costs or just flag the item and state info we require before cost can be allocated
  • For new basement, I prepared an alternative basement estimate to the one being designed to advise alternate options
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

How would you structure a cost report?

A
  • Introduction/exec summary
  • Project Financial Summary showing Budget vs current position vs previous position
  • EAIs
  • AEAIs
  • Early Warnings
  • PSUM adjustments
  • VE items
  • Cashflow
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What RICS guidance is there on cost reporting?

A

RICS Cost Reporting 1st Edition 2015 (guidance note)

RICS Valuing change 2010 (practice Standards)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are valuation rules?

A

Rules in a contract for valuing change

The Valuation Rules are set out in the Contract
Conditions and reflect a sliding scale of options,
based on how closely the varied work resembles
work that is part of the Contract Documents

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What are the valuation rules in NEC?

A

Assessed in accordance with Defined Cost:

People
Equipment
Plant and Materials
Charges
Manufacture
Design
Insurance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

When using variation rules, what are the issues to consider?

A
  • Character of change
  • Conditions of change
  • Quantity
  • Prelims
  • What are “Fair rates and Price”
  • Daywork
  • CDP
  • Change of conditions for other work
  • Contractor’s Quotations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What are “Fair rates and Price”?

A

Case law does not provide a definitive position.

Fair rates and price = fair valuation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What is daywork?

A

Method of valuing additional/substituted work which cannot properly be valued by measurement.

Records need to be prepared to document labour, plant and materials used in operation to verify work conducted.

Records of labour/plant etc are multiplied by rates identified in the SSCC. If no rates, actual cost plus fee.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

How do you present your monthly cost updates?

A

Submit cost report, follow it up with a phone call or face to face meeting to run through key headline points and any detail client wishes to delve into

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is an S curve?

A

Standard Curve

A generic cash flow forecast in the shape of an “S” typical of most projects

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Why would you ask for the contractor to produce their own cash flow based on the programme?

A

It will be more accurate than an S curve as it will account for anomilies relevant to the project, whereas the S curve is generic.

It is important to watch out for front-loading

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

What is front loading?

A

This is where the contractor forecasts costs at the start of the project to be greater than they actually will be, in order to coerce the PQS into thinking higher payments are due early.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What are the risks of over-payment?

A

This improves the contractor’s cash flow but leaves the client at risk, as they may be paying more than has actually been carried out.

If the Contractor stops working/goes into liquidation, the Employer may lose out as they have paid for more than they have received.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What is the most accurate form of measurement of works completed on site to date?

A

Not judging by the cash flow forecast, but by visiting the site and conducting an assessment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Who is responsible for extreme weather?

A

In NEC, Employer. (60.1(13))

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

What are compensation events and what clause in NEC are they?

A

Events resulting in the contractor being entitled to additional time and/or money. Identified at clause 60.1.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

How did the contractor request change?

A

Via client’s project management system, conject. Raising EWN’s and NCE’s.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

What did you do if you didnt agree with the contractors change request?

A

If I didn’t believe it was a client cost I would write an email as to why, referring to contract if necessary, then follow up with a phone call

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

At final account, why were some of the variations not agreed?

A

Contractor was late to issue the change request

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

What happens to leftover PSUM?

A
  • transferred into contingency once item was closed
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What happened to variations neither party agreed on?

A
  • Fortunately in this contract that didn’t happen, we agreed all variations
  • Next step would have been mediation or adjudication
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Give an example of a change on the project in central London?

A
  • 30 yard trucks could no longer go into loading bay because it caused vibrations as they drove over light well
  • It was agreed that that was their strategy during tender
  • Cost for omission of large trucks and addition of smaller trucks
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

What is a final account?

A

The conclusion of the contract sum including all adjustments.

Signifies the agreed value the Employer will pay the Contractor.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Will a final account typically include VAT, interest on overdue payments, LADs, or loss and expense?

A

Loss and expense YES

LADs, VAT and interest NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

When does preparation of a final account occur?

A

Throughout the contract period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

How would you structure a final account?

A

No firm defined format, but an example would be:

  1. Contract Sum (CSA of BoQ)
  2. Variable costs (PSUMS, PC Sums, Daywork allowances)
  3. Variations/Contract Instructions
  4. Loss and expense
  5. Fluctuations
  6. Risk allowance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

At final account, must all variations be instructed?

A

All changes should have a contract instruction, but it is not uncommon at final account stage for some variations to not have received a formal instruction still.

It is good practice to ensure the architect/CA are aware of all variations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

What is the final certificate?

A

After the defects liability period is over, the final certificate is issued by the CA allowing the release of the remaining retention monies.

Final Account must be agreed before final certificate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

What happens to the retention release if the final account has not been agreed at PC?

A

The employer is entitled to release half retention only up to the amount agreed thus far.

Another payment certificate may be issued once FA is agreed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

What happens if the FA is not agreed after the DLP is over with regards to retention?

A

The employer is entitled to release full retention up to the amount that has been agreed thus far

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

What happens if the contractor does not fix the defects during the DLP?

A

Most standard forms of contract allow the Employer to use retention money to employ a different Contractor to fix the defect.

The Contractor is allowed to rectify the issue themselves first, and usually this is defined by a timescale after notification by the CA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

What are patent defects?

A

Can be discovered by reasonable inspection

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

What are latent defects?

A

Cannot be discovered by reasonable inspection

53
Q

What are contra charges?

A

Where the Employer recovers costs from the Contractor that the Contractor has caused the Employer to incur.

54
Q

What’s a CIL?

A

Community Infrastructure Levy

A levy applied by Local Authorities on new developments to cover costs for infrastructure to the area. Areas under 100m2 exempt.

Full details on govt. website for inclusions/exclusions

55
Q

What is handed over at Completion?

A

Anything which the WI states is to be handed over.

Typically

  • H&S file
  • O&M manual
  • As built drawings
56
Q

How did you negotiate your final account?

A
  • Went in prepared with justification for all items
  • Had discussed with client previously to get his buy in
  • Stood firm on those I felt client was entitled to
  • Job is not to “make money” for the client, but to be a fair mediator
57
Q

What are the benefits of a rolling F.A?

A
  • Client always knows the likely outturn of costs for the project should nothing else change
58
Q

When should you agree FA?

A

Should agree FA as soon as possible after PC

59
Q

When does the contractor receive his final and penultimate payment?

A

Final payment will be at the end of the DLP subject to FA being agreed, to release retention monies

Penultimate payment will usually be then FA is agreed

60
Q

What are the different types of risk?

A

Project risks

  • Business risks
  • Environmental risks
  • External environment risks (force majeure, government shifts)
61
Q

What legislation tries to improve construction cash flow?

A
  • The Housing Grants, Regeneration and Construction Act 1996

- The Local Democracy, Economic Development and Construction Act 2009

62
Q

What are some liabilities that a consultancy may have?

A
  • Staff wages
  • Premises
  • Training
  • Equipment
63
Q

What stakeholders may be interested in a companies cash flow?

A
  • Funders e.g. banks, local authorities, guarantors
  • Shareholders
  • Employers
64
Q

What should you look for in a company cash flow of a tendering contractor?

A
  • Overdraft size
  • How often they use their overdraft
  • If their overdraft was removed, what effect would that have
  • Is it bringing in as much money as it is spending?
65
Q

What is the purpose of a construction project cash flow?

A
  • To project when payments are due to ensure finances are in place (alert bank/funder of drawdowns)
  • Construction cash flow will inform company’s cash flow
66
Q

What may be included in a Contractor’s cash flow?

A
  • Cash in from Employer
  • Cash out to sub-contractors
  • Cash out to suppliers
  • Retention monies in
  • Monies to their consultants
  • Tax payment
67
Q

Who do you issue a cost report to?

A
  • QS must take instruction from the client. It is confidential information.
  • If Contractor had a copy, it could jeopardise the client’s bargaining position.
68
Q

What is loss and expense?

A

Where the contractor is entitled to be reimbursed by the client for loss and expense.

69
Q

What is value management?

A

Gives a project a clear path to create value through the understanding of client objectives as well as the needs and wants of the stakeholders.

Value engineering used to reach these objectives.

70
Q

What is value for money?

A

Achieving value for money requires value management to understand objectives and client values, then using VE to decrease cost while maintaining functionality, or increase functionality greater than cost.

More value for less money.

71
Q

Where can a QS learn more about cash flow?

A

RICS Practice Standards UK - Cash Flow Forecasting 2011 Guidance Note

72
Q

What must the contractor do if they forsee a relevant event?

A
  • Notify the CA immediately

- Attempt to mitigate the issue

73
Q

What is a relevant event?

A

An event defined under JCT contracts that is an employer’s risk and results in the contractor being delayed.

74
Q

What situation would result in LADs

A

Liquidated and ascertained damages would be due if there was a delay to the completion date caused by the contractor

75
Q

Who’s responsibility is it to identify and rectify defects?

A

Contractor

76
Q

Who manages the DLP?

A

The CA acts as the bridge between the Client and Contractor.

Client reports to the CA who decides whether the issue is a defect or maintenance issue.

If it is seen to be a defect, the CA will instruct the Contractor

77
Q

What are unliquidated damages?

A

Unliquidated damages are damages, the exact amount of which has not been pre-agreed, and are typically determined by the courts.

A client can claim for unliquidated damages even if LADs are specified in the Contract, if the actual loss incurred is much more than originally expected.

78
Q

What are LADs?

A

Liquidated and Ascertained Damages are pre-determined damages set at the time that a contract is entered into, based on a calculation of the actual loss the client is likely to incur if the contractor fails to meet the completion date.

They are generally calculated weekly or daily, and are NOT A PENALTY. They must be based on actual loss from things such as rent, income

79
Q

What are different methods of calculating sums due at payment?

A
  • Staged payments
  • Milestone payments
  • Payments following an activity schedule
  • Periodic payments (Work done to date)
80
Q

What is price based on in NEC option A?

A
  • Priced Lump Sum contract with activity schedule.
81
Q

What is an advance payment?

A

When a Contract Sum is paid in advance of the exchange (prior to work being done/goods supplied)

82
Q

Why may a contractor request advance payment?

A

If there are significant start up/procurement costs, e.g. expensive items with long lead times

83
Q

How might the client protect themselves when paying a Contractor in advance?

A

Secure a payment bond from the Contractor

84
Q

Materials for the project have been sourced and delivered to site. Does the client pay for those materials?

A

Yes unless stated otherwise in the Contract. Payment is made regardless of whether Contractor has paid supplier.

85
Q

What is “retention of ownership” in regards to materials?

A
  • This is a clause that allows the supplier to hold ownership of materials until payment.
  • Good for supplier as it encourages payment, improves cashflow
  • Bad for the client as if items are not affixed, as client may pay Main Contractor but Main Contractor may not pay supplier. Supplier could reclaim those items.
86
Q

How are fluctuations calculated?

A

In accordance with secondary option clause X1. Using nationally available price indices.

87
Q

When tendering, what document provides guidance?

A

RCIS Tendering Strategies 2015

eTendering 2010

88
Q

What risk items would be included in final account?

A

If lump sum, whatever risk the contractor had allowed for in his original price will be assessed as part of the price of work done to date. Other employer risks that materialised throughout the works will be CE’s.

89
Q

What’s the difference between a snag and defect?

A

Snag = before PC

Defect = after PC

90
Q

Why are changes more expensive on DB contracts?

A

Potential for “fee on fee” with contractor’s design costs
Less transparency on costs opposed to a BoQ
Changes to design may have additional knock on effects to other areas of the contractor’s design

91
Q

Is insurance required for sections after they’ve been granted PC?

A

No, client is responsible once they take over section

92
Q

Why are ADR different to other forms of dispute resolution?

A

ADR vs resolving a legal dispute through the courts:

  • They are all private
  • Faster
  • Cheaper
93
Q

How would you prepare a cash flow forecast?

A
  • Most basic method, apply project value over S Curve
  • Apply value of project over the programme, taking into account the costs of packages and when they are active. Long lead items.
  • Ask Contractor to prepare cash flow forecast, but watch for front loading

RICS Cash Flow Forecasting 2011 GUIDANCE NOTE

94
Q

How do you monitor cash flow through project?

A

Plot interim payments against cash flow forecast to determine whether project is behind/ahead of schedule

95
Q

What would you do if cash flow is behind forecast?

A
  • Advise client the contractor may be behind work/not meet PC
96
Q

How is force majeure treated under NEC?

A

If unamended, constitutes a CE under clause 60.1 (19) .

97
Q

What are the subsections of your monthly valuation?

A

Depends on the type of contract.

Typically:

  • Prelims
  • Design (if applicable)
  • Measured Works
  • Materials on/off site
  • PSUMs (if applicable)
  • Variations / CE’s
98
Q

What’s the difference between a performance bond and a retention bond?

A

Performance Bond - assurance of quality completion of obligations

Retention Bond - A type of performance bond. Ensure faithful completion and defect correction instead of using cash retention.

99
Q

How would you report an EoT to the client?

A

claimed via a CE

100
Q

Does a company have to cease trading if they go into liquidation?

A

No - they can liquidate some assets then continue business.

E.g. a retailed liquidating a number of stores then continuing to operate online/in flagship stores

101
Q

What is the difference between a payment notice and interim certificate?

A

No difference in NEC

102
Q

What is the name of the date 7 days prior to the Due Date, and what does the Contractor submit?

A

Assessment date

Application for payment

103
Q

What materials would you value on site?

A

Materials that you can clearly see and quantify on site.

104
Q

What is a vesting certificate?

A

A certificate verifying that the material has passed to the Contractor and that the materials will be identified, stored and insured

105
Q

What should you be cognisant of when valuing materials off-site?

A
  • Is it a listed item?
  • Assess likelihood of contractor insolvency
  • Proof of safe storage, clearly marked and set aside
  • Off-site materials bond
  • Check vesting certificate to ensure Contractor has items and they’re insured
  • Check suppliers Ts & Cs do not include retention of title clause
106
Q

How are works involving PSUMs dealt with on a construction project?

A

Agree Cost -> Instruct Works -> Omit PSUM -> Add actual Cost

PSUM works should not be carried out until they are instructed

107
Q

Would you value work if it had a known defect?

A

No

108
Q

Would you value variations not instructed?

A

I would not formally value them until instructed.

Depending on the likelihood of instruction, I would undertake an internal valuation to include in my forecast.

109
Q

What’s the FA procedure in NEC?

A

No provisions for final accounts in NEC3.
PM assesses the amount due following Completion in accordance with clause 50, certifies payment within one week of the assessment date.

If the contractor submits a final application for payment on or before the assessment date, the PM must take this into consideration.

NEC 4 includes provisions for final assessment, similar to NEC 3 but allows either party to refer to adjudication (W2).

110
Q

What is prolongation?

A

Additional costs that a contractor has incurred as a result of the completion of the works being delayed by an event that is the responsibility of the Employer

E.g. late possession of site, delays in instructions

111
Q

What’s the difference between loss and expense and prolongation?

A

Prolongation relates specifically to costs incurred as a result of the completion date being delayed.

Loss and expense is the wider term relating to material losses as a result of the Employer’s action

112
Q

What are fluctuation provisions in a contract?

A

a mechanism for dealing with the effects of inflation

113
Q

What fluctuation provision is provided in NEC?

A

Secondary option clause X1

114
Q

How does secondary option clause X1 operate?

A

Use a base date (B) and latest date (L) indices to calculate the price adjustment factor (L-B)/B.
This factor is then applied to the total of the various proportions included in the contract data. Can also be applied to defined cost of CE’s.

115
Q

How do you calculate fluctuations on an Interim Payment?

A

Depends on the type of contract.

Lump Sum contracts may be fixed or fluctuation.

I have not worked in a contract with fluctuations, would review the option in NEC (X1).

116
Q

What does “heads of claim” mean?

A

The categories/headings of Loss and Expense claims in a Construction Contract

117
Q

What are the heads of claim for loss and expense?

A

Depends on the type of contract - NEC does not provide for “loss and expense” claims, instead adopts the CE process.

In which case they are assessed using Defined Cost.

SSCC includes defined cost of People, Equipment, Plant and Materials, Charges (incl. people OH), manufacture, design and insurance.

These costs must be related to the specific CE and claims must include for the time impact.

118
Q

You’re doing your first valuation. Which insurances to you pay for upfront?

A

Some bonds

Things like PL/EL insurance will be added to their companies insurance policy and so not part of valuation

119
Q

If you were doing a valuation, how would you do this?

A
  • Go to site with their submission
  • Inspect work that’s actually done to date, take photos etc
  • Measure work and compare to their submission
  • Agree valuation with contractor and issue my recommendation
120
Q

How are LDs actually paid?

A

EA will give notice as to how the LDs are to actually be paid

Could be separate or added to FA.

121
Q

What is price based on in NEC option B?

A

Priced contract with Bill of Quantities

122
Q

What is price based on in NEC option C?

A

Target contract with activity schedule. However interim payments are assessed as defined cost plus fee. Includes pain gain share

123
Q

What is price based on in NEC option D?

A

Target contract with bill of quantities.

124
Q

What is price based on in NEC option E?

A

Defined cost plus fee

125
Q

What is value?

A

A relative measure of usefulness of something for the cost paid for it.

126
Q

What do you understand by the term VE?

A

Value Engineering

Collaborative approach aimed at providing the lowest cost functional solution without compromising quality, reliability, performance or delivery.

127
Q

What do you understand by the term VM?

A

Value Management

Concerned with making it explicit what value means to the client. Concerned with early stages of design. Aims to get it right the first time compared to VE which is used when things go wrong.

128
Q

What are the limitations of VE?

A

Assumes all feasible design alternatives provide the same level of functional performance therefore it is assessed on cost alone.

129
Q

Why is VM needed?

A

Aim is to reach agreement on exactly what the problem is and achieve a shared understanding of what is being sought.

Different parties have different priorities; if agreement is not reached then the project could be perceived as a failure.

RICS APC Preparation (13 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions