Brainscape's Knowledge GenomeTM

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


See full index

RICS-SY > Project Financial Control and Reporting > Flashcards

Project Financial Control and Reporting Flashcards

1
Q

what is the purpose of a cost report

A
  • to inform the client of the likely out turn of cost for a construction project
  • this can empower the client to make changes /secure funding/mitigate foretasted costs
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what will a cost report include

A
  • all costs incurred at the date of the report that are known and can be accurately valued
  • all costs incurred that are known and can be accurately estimated
  • forecast of costs that can be reasonably foreseen and estimated
  • risk allowances necessary as can be reasonably foreseen
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

how often should a cost report be submitted

A

on a regular and frequent basis, e.g. once a month

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

what sub sections would you expect in a CONSTRUCTION cost report for a lump sum contract

A
  • contract sum
  • adjustments to variables
  • adjustment of variations
  • adjustment of fluctuations
  • claims of loss and expense
  • adjustment for risk allowance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

where can you find information on cost reporting

A

RICS-Guidance Note-Cost Reporting 1st Edition 2015

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

what sub sections would you expect in a PROJECT cost report

A
  • construction costs
  • professional fees
  • statutory fees and charges
  • third party costs
  • direct work costs
  • land costs
  • agency costs
  • finance costs
  • legal fees
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

what items in a contract sum can affect the out turn of the final account

A
  • defined provisional sums
  • undefined provisional sums
  • provisional quantities
  • prime costs sums
  • daywork allowance
  • contract instructions
  • anticipated instruction/ early warnings
  • loss and expense
  • fluctuations
  • risk allowances
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

who should the cost report be distributed 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
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

how should provisional sum/prime costs/day work allowance/risk allowances be valued in a cost report at the ourset of a project

A

they should be reported at 100% of the amount defined in the contract sum

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what is loss and expense

A

-Construction contracts will generally provide for the contractor to claim direct loss and/or expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

what is 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
12
Q

will 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
13
Q

in JCT DB 2011 contract, which clause refers to the final account process

A

Clause 4.12

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

what is a rolling final account

A
  • where all instructions and cost effects to a project are agreed and up-to-date at the point of the latest financial report
  • final account statement if works were to complete with no further changes
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
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
16
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
17
Q

how would yo structure a final account

A
  • contract sum/boq
  • variable costs (provisional sum, prime cost sums, day work allowances)
  • variations/contract instructions
  • loss and expense
  • fluctuations
  • risk allowance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
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 state 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
19
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
20
Q

when does half retention get released

A

half of the retention should be released upon practical completion in most standard contract forms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

what happens to the retention release if the final account has not been agreed at practical completion?

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
22
Q

what happens if the FA is not agreed after defect liability period 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
23
Q

what happens if the contractor does not fix the defects during the defects liability period

A
  • most standard forms of contract allow 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 contract administrator
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

what are the patent defects

A

can be discovered by reasonable inspection

25
Q

what are the latent defects

A

cannot be discovered by reasonable inspection

26
Q

what are contra charges

A

where the employer recovers costs from the contractor that the contractor has caused the employer to incur

27
Q

what would you do if there were 20 outstanding variations that were not instructed but agreed during the final account negotiation

A

issue an instruction wrapping up all of these outstanding works, with the instruction listing each variation as a subsection/bullet point

28
Q

in JCT contract suite, how long does the contractor have to provide information for the final account

A

6 months

29
Q

what is value engineering

A

improving the value of products, by increasing functionality/quality and/or reducing cost

30
Q

what is value management

A
  • give a project a clear path to create value through the understanding of client objectives as well as needs and wants of the stakeholders
  • value engineering used to reach these objectives
31
Q

what is value for money

A

Achieving value for money requires value management t 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

32
Q

where a qs can learn more about cash flow

A

RICS Practice Standards UK-Cash Flow Forecasting 2011 Guidance Note

33
Q

what are the two types of cash flow forecast relevant in construction?

A
  • cash flow for a company

- cash flow for a construction project

34
Q

how long will company cash flow period forecast

A

a year

35
Q

what is the value of cash flow forecast for a company

A
  • resource and business planning

- analyzing the companies health

36
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 cashflow will inform company’s cash flow
37
Q

what may be included in a contractor’s cash flow

A
  • cash in from employer
  • cash out to sub-con
  • cash out to suppliers
  • retention monies in
  • monies to their consultants
  • tax payment
38
Q

why would a construction cash flow be useful for a PQS

A

to monitor the progress on site

39
Q

what is an S curve

A
  • Standard Curve
  • A generic cash flow forecast in the shape of an ‘S’ typical of most projects
  • a mathematical graph that depicts relevant cumulative data for a project—such as cost or man-hours—plotted against time
    1) the growth of the project in the beginning is usually low, team members is are either researching the industry or just starting to engage in the first phase of execution
    2) as more progress is made, the growth accelerates rapidly-creating that upward slope that forms the middle part of S. This point of maximum growth is called point of inflexion. During this period, project team members are working heavily on the project, and many of the major costs of the project are incurred.After the point of inflexion, the growth begins to plateau, forming the upper part of the “s” known as the upper asymptote—and the “mature” phase of the project. This is because the project is mostly finished at this point and is winding down: Typically only tasks such as finishing touches and final approvals are left at this point.
40
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 anomalies, relevant to the project, whereas the S curve is generic
  • It is important to watch out for front-loading
41
Q

what is front loading

A

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

42
Q

what are the risks of over-payment

A
  • this improves the contractor’s cash flow but eaves 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 the have paid for more than they have received
43
Q

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

A

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

44
Q

what are the benefits of requesting company cash flow forecasts before employing consultants/contractors

A
  • Predict how the company will be performing in the future

- Gauge whether they will be able to cope with the additional works

45
Q

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

A
  • overdraft size
  • how often they use the overdraft
  • if their overdraft was removed, what effect would that have
  • is it bringing in as much money as it is spending
46
Q

what stakeholders maybe interested in a company’s cash flow

A
  • funders, e.g. banks, local authorities, guarantors
  • shareholders
  • employers
47
Q

what are some liabilities that a consultancy may have

A
  • staff wages
  • premises
  • training
  • equipment
48
Q

what are four types of payment mechanism in construction contracts, and which are the most/least accurate

A
  • stage payments (highest accuracy of cash flow forecasts, but lowest accuracy of value of work done to date)
  • milestone payments
  • payment against activity schedule
  • valuation of work done to date on site (lowest accuracy of cash flow forecast, but highest accuracy of value of work done to date)
49
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

50
Q

how does the HGRCA 1996 improve cash flow in construction

A
  • right to interim, periodic or staged payments
  • contracts must include mechanism for communicating what is due, when final date for payment
  • pay less notice must be communicated early
  • contractor may suspend performance for no payment
  • prohibiting pay that is linked to payment in a different contract
  • statutory right to refer disputes to adjusdication
51
Q

what is the DHSS Expenditure Forecasting

A

The DHSS Expenditure Forecasting was created by KW Hudson for the Department of Health and Social Security for forecasting expenditure on capital projects

52
Q

what is a risk

A

A potential event that, if it occurs, may cause the project to fail to meet one or more of its objectives

53
Q

what is the different between a risk and an issue

A
  • An issue is something that’s happening now that is or will soon jeopardize the delivery of project objectives
  • A risk may turn into an issue. When the probability of a risk reaches 100%, it is an issue
  • an issue cannot turn into/be a risk as it is already happening
54
Q

what are the different types of risks

A
  • projects risks
  • business risks
  • environmental risks
  • external environmental risks (force majeure, government shifts)
55
Q

what does risk management seek to do

A
  • identify risks
  • assess probability and impact of each risk
  • identify actions to avoid, reduce, or mitigate the risk
  • implement the monitoring actions that are cost effective solutions to ensure project objectives are achieved
  • provide feedback on the above future
56
Q

risk management can be divided into two phases, what are these

A
  • risk analysis-identification and assessment

- risk management-mitigation and control

57
Q

what is 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 100 m2 exempt
  • Full details on govt. website for inclusion/exclusions
58
Q

what is handed over at Practical Completion

A
  • Health and Safety File
  • O&M manual
  • Building Log Book
  • As built drawings
  • User guide

RICS-SY (17 decks)

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