Project Financial Control And Reporting Flashcards
You mentioned you are responsible for cost reporting to the client. Please talk me through how you would produce a cost report and how this would be presented to the client.
Set up meeting to go through key client objectives. This would include:
- timescales
- packages to use
- cashflow
- arrangement of changes
I would arrange monthly meetings to run through the cost report and would present the initial budgets, any transfers in scope
How do you produce the cashflows on your project and why is this helpful to the client… What do they use it for?
I use the programme and the cost plan to determine each packages value and time taken. I then input this to software to establish the cashflow amounts.
What are defined v undefined provisional sums? How do you report on these?
- Defined provisional sums are those which have been described in sufficient detail that the contractor is expected to have made allowance for them in their programming, planning and pricing preliminaries.
- Undefined provisional sums are less well described and so the contractor cannot be expected to make allowance for them in their programming, planning and pricing preliminaries.
How did you calculate loss and expense on Cellzome?
My scope on this project was to only record the loss and expense on the cost report. However if I was working on a UK JCT contract I would first make sure that a loss and expense claim has been approved as a relevant matter has occured. If it has I would assess the claims of head of the loss and expense.
What risks did you price on Cellzome and how did you price these?
This included additional preliminaries costs as there was risk the project could go over by 6 weeks.
I also calculated the cut and fill volume from the civil drawings and used a market tested rate for removing contaminated soil.
What is the purpose of cost reporting?
- To record all known costs which can be accurately valued
- To report all costs which are known and can be estimated at the date of the report
- To forecast costs as can reasonably be foreseen at the date of the report
- risk allowances necessary as can be reasonably foreseen at the date of the report.
What are benefits of cost reporting?
Cost reporting regularly and frequently will afford the client and project team the ability to control the outturn construction cost.
How is outturn cost controlled by cost reporting?
Outturn cost is controlled by the recognition of cost changes incurred and planned implementation of future cost changes.
What are variable costs?
Provisional sums Risk Loss and expense Liquidated damages Variations Prime cost sums Re-measurable contracts Anticipated instructions Fluctuations
What is good cost reporting?
- Always accurately track cost and changes
- Communicate changes effectively as and when required
- Keep a rolling final account
- Good cost report document to keep client informed
- Good relationship with contractor
How do you ensure effective control of costs in a project?
- Proactive risk and contingency management
- Implement change control process
- Management of prov sums within budget
- Regular cost reporting
- Rolling final account
What is cost control?
The process of valuing and manging changes. To ensure the project is delivered at the right price.
What are the processes for evaluating change?
- Similar nature – use pricing schedule
- Contractors quotes
- Dayworks
- First principle
- Schedule 2 quote
Would you issue a final payment certificate?
You should never issue a final payment certificate as this would mean you cannot claim for latent defects.
When is the final account produced?
Contractor must submit information within 3 months of PC. If they do not, you will need to prepare this and give notice you will do it.
On cellzome, why was it important that the contingency pot was only used for risks which there was no provision for?
This is because these risks already have a provision in the contract and using the contingency would not be necessary. All costs which can be foreseen should have a provision within the contract.
What is the purpose of a cost report?
To inform the client in a construction project of the likely outturn cost of the construction project. The forecast of outturn costs may be expressed as a variance against a budget amount, or expressed in absolute terms.
What are the contents of a monthly cost report?
Lump sum contracts • contract sum • adjustment of variable costs • adjustment of variations • adjustment of fluctuations • claims for loss and/or expense; and • adjustment of risk allowances.
Are there any costs you would exclude from a cost report?
If it is a construction cost report i would exclude professional fees, 3rd party costs, land costs, agency costs, finance cost and legal fees.
On the basis that most clients don’t want to read a whole report, what do you convey in the Executive Summary?
Budget, forecast cost, risk, approved changes, unapproved canges, provisional sums, cashflow
Would you include contractor claims in your cost report? What about loss and expense and LDs?
Yes these would be listed under the unapproved variations until they have been approved.
How have you controlled costs in the design stages of a project?
Yes, I have implemented change control and showed differences using precontract cost trackers.
You have used RICS guidance notes, what are they? Anything significant about them?
A guidance note is not mandatory but is recommended best practice and if I were to be litigated against in court, the court would likely take my side if I followed the guidance note.
