Project Financial Control & Cost Reporting Flashcards
What are the main headings on a cost report?
Financial Summary - budget,actual costs, committed costs, anticipated costs etc.
Confirmed variations / changes
Unconfirmed variations / changes
Provisional Sums
Contingency
Risks/Mitigations
What factors affect the project outturn cost?
Fixed costs - contract sum
Variable costs - prov sums, variations, prov quantities, prime cost, daywork allowances, loss and expense, fluctuations, risk allowances.
What is the difference between a project and a business cashflow?
One focuses on a particular project, one focuses on the overall business. Both provide an overview of liquidity and viability.
Why are cashflows important?
Cashflow’s are important as they provide an overview of liquidity and performance. Can be used as a budgetary, planning or risk management tool.
What would you do in a scenario where the client doesn’t have the funds to pay the contractor?
If the CA/PM has already issued the payment notice, then I would like to issue a pay-less notice in the first instance.
Firstly, I would discuss with the client the reason for the funding issue. I would advise them to seek legal counsel if the
Then I would look to communicate with the contractor, advising them of the reason and trying to agree next steps to ensure payment is made whether by installments or by deferment to ensure the project was continued where appropriate.
Thirdly I would look to engage in risk management to see what knock on effects this would have on the project (if it continued).
What did you include in your cost report?
Cover
Commentary
Executive/Financial Summary
Compensation Events
Provisional Sums
Anticipated CE’s
Contingency (inc. drawdowns)
Construction Cash flow forecast
What would you usually exclude from a cost report?
VAT
Capital allowances - a tax relief that can be applied for certain types of construction expenditures.
Planning costs - can sometimes be included/excluded.
Direct works - can sometimes be included/excluded.
If the cash flow differed from the contractor’s, how was this managed?
I would look to understand why by engaging with the contractor. It is usually due to accelerated or lack of progress on site, leading to less payment.
I would then act based on the information, i.e. to inform client that extra funding charges may apply if the programme was going to be prolonged.
What would you do if the latest programme was not accepted when producing a cash flow?
I would look to understand why it was not accepted, and engage with the contractor to see if it can still be considered accurate.
What are provisional sums?
Provisional sums are allowances included in a contract to cover costs that cannot be precisely defined at the time of contract signing.
What is the difference between defined and undefined provisional sums?
Defined - these are allowances included for costs that are sufficiently defined enough for the contractor to have made an allowance in their programming for it.
Undefined - these are allowances included for where the works are unknown to the extent that the contractor is not deemed to have included for their programming and planning.
When advising the client on the change control process, what did you advise if they were likely to miss meeting the timescales?
I would advise them to have the PM to reach out to the contractor to mutually agree an extended deadline.
What are the implications of missing a NEC deadline?
In most cases, the contractor must reach out to the PM to point out the missed deadline, in which case the deadline is then extended by a week. After that, if still no reply from the PM after the prompting and one additional week, the change is deemed to be accepted.
How would you establish VfM when assessing contractor quotations?
I would look to ensure that the rates used were in line with what was agreed in the contract.
Where new activities were costed, I would ensure they were included in the SSCC firstly. Then i would benchmark the costs against rates used on similar projects. If no comparable data, then i would undertake market testing to ensure it was an accurate reflection of the market.
What was included in the final account?
The final account included a statement of final account detailing the contract sum and the adjustments to this figure, i.e. compensation events, which was signed by both parties.
It also included the final payment certificate, the completion certificate which were used to prove completion had been reached.
How would you advise the client if the value had been exceeded?
If the total of the contingency was exceeded due to new works, I would ask the client if there was further funding to be sought. I would also look to value engineer the scope to bring the costs down, looking to omit non-essential scope or swap items/materials for lower cost alternatives without impacting functionality.
What should be the agenda in an early warning meeting?
Discuss the early warning meetings that have been raised since last meeting, looking to mitigate the likelihood or potential impact. Assign actions and mitigation to relevant person.
Update previously raised early warnings, including any actions taken and their outcomes.
Next steps and AOB.
What was your role in early warning meetings for the Brent Cross project?
My role in the EWM for brent cross was as a contributor to the discussion in mitigating or avoiding them. I also costed potential early warnings to provide the client with a budget figure of expected cost should they materialise.
How did you cost early warnings?
It would be dependent on the type of early warning so I would first clearly identify the scope of the early warning.
Then in the first instance, I would look to benchmark against comparable rates. If no comparable rates, I would conduct market testing. If no chance to market test, i would break the early warning into an itemised list of scope according to labour, materials, plant and other associated costs on a first principles basis and build up from there.
What items were included in the early warning register/risk register on Brent Cross?
Biggest early warning that couldn’t be avoided was the chance of the contractor becoming delayed on the base build.
The mitigation for this was just to keep clear lines of communication, establishing regular progress meetings and site visit to see progress.
Also contractually, delay damages was inserted into the AfL to ensure that the university would be remunerated for any delays to the expected start on site date.
How would you advise on increasing risk allowances on Brent Cross?
Pre-contract -
What are the main headings on a cost report executive/financial summary?
Initial Budget
Transfers
Client Changes
Current Budget
Orders placed
Instructions
Current committed costs
Orders not placed
Forecast cost
Unapproved changes
Early warnings
Potential Outturn Cost
Changes in period
Certified to date
How do you report on provisional sums in a cost report?
Usually has a dedicated section.
Figure allowed for within contract.
Forecast cost.
Variance to cost.
Prov sum draw down.
Change in period.
How was contingency managed on Brent Cross?
There was a priced early warning register. This would be reviewed along with the risk allowances against the contingency budget. When new early warnings were added, they would be priced and contingency would be allocated against it.
