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RICS Mandatory > 2 - Project Finance > Flashcards

2 - Project Finance Flashcards

1
Q

What are the different types of Cost Report?

A

1) Elemental
2) Construction
3) Project
4) Programme

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2
Q

Explain an S-Curve

A
  • Plots COWD against time
  • As you go through the project, an S-Curve is formed
  • Can analyse project performance by reviewing if you are in front of or behind the curve
  • HOWEVER - It can mean that maybe the costs were front loaded, or that the works are over-priced.
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3
Q

What is Cost Control?

A

The processes and procedures to align and manage cost in line with the Cost Plan

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4
Q

What is a Cost Plan?

A

The overarching plan of the project costs over time. An evolving document that grows in accuracy and scope.

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5
Q

What informs the early stages of a cost plan?

A
  • Initial appraisal through feasibility study
  • BCIS / Index amounts
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6
Q

What informs the middle stage of a cost plan?

A
  • PTE
  • Quants taken from design
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7
Q

What informs the final stages of a cost plan?

A
  • CSA and Contract Sum

- Final account

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8
Q

Under NEC, what is Defined Cost?

A

The costs permitted under the Contract that are incurred/expended by the Contractor

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9
Q

What is the Schedule of Cost Components?

A

List of categories of Defined Costs that form the total of the prices setting out what the contractor will be paid for and how that is calculated. These are:

  1. People
  2. Equipment
  3. Plant and materials
  4. Charges
  5. Manufacture
  6. Design
  7. Insurance
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10
Q

What are Disallowed costs?

A

Costs that are incurred by the Contractor that they are not entitled to payment such as:

  • Amounts not justified by records
  • Amounts paid for something else not part of the project
  • Errors or mistakes in payment to others
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11
Q

What cost measurement methods are there?

A
  • NRM1 - Order of cost planning for building works
  • NRM2 - Detailed measurement of buildings works
  • NRM3 - Order of cost and measurement of Maintenance Works
  • ICMS - International Construction Measurement Standards
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12
Q

What was the Standard Method of Measurement replaced by?

A

NRM2

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13
Q

What is an Outturn cost and what affects it?

A

Actual construction cost

Fixed costs - The works undertaken

Variable - Changes, prov sums etc.

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14
Q

What is the Price of Work Done to Date?

A

Defined cost the contractor will have spent before the next assessment date, which includes CEs, plus their fee

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15
Q

What is a provisional sum?

A

An allowance or estimate included within the contract price.

This is not sufficiently defined, designed or detailed and may not be work the employer wants to carry out.

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16
Q

How does NEC deal with provisional sums?

A

They do not provide for provisional sums as if the scope is unclear the item should be excluded until it can be defined.

17
Q

What is a defined provisional sum?

A

Described in sufficient detail for the contractor to make an allowance for them in their programme, planning and preliminaries.

18
Q

What is an undefined provisional sum?

A

The contractor does not allow for programming and preliminaries. Contractor may be entitled to EOT or additional prelims when the works are underktaen.

19
Q

What are some pricing options within contracts?

A

Bill of Quantities
Lump-sum
Remeasurement
Target Cost
Guaranteed maximum price

20
Q

What is a lump sum contract?

A

Provides a payment for a set amount. It has been determined by a contractor by estimating their cost to provide the work.

21
Q

What is a remeasurement contract?

A

Work carried out on pre agreed unit rates

22
Q

What is a target price contract?

A

Target price is set and any cost savings are shared between the contractor and employer.

23
Q

What is a guaranteed maximum price contract?

A

Sets a limit the employer will pay the contractor regardless of the works incurred.

24
Q

What are contractor preliminaries?

A

Items that cannot be allocated to a specific project element.

25
Q

Can you give some examples of preliminaries?

A

Management and Staff
Site establishment
Temporary services
Security
Insurances

26
Q

What is a BoQ?

A

Means of breaking down the project into exact quantities which are measured in an industry wide recognised standard

27
Q

What is Life Cycle Costing?

A

Assesses costs occurring throughout a building’s lifespan, from construction, through use and maintenance, to end-of-life.

28
Q

What is an interim valuation?

A

A document pit forward by the contractor detailing their progress against each of the work elements.

29
Q

What is a variation?

A

A change or alteration to the scope of works.

30
Q

What is a pay-less notice?

A

Gives the paying party the right to pay less than the amount in the payment notice

31
Q

What is the payment timeline for a JCT D&B Contract?

A

Interim valuation date 7 days before Due Date
Due Date - Valuation
Payment notice - Issued by employer stating sum it considers is due on the due date. 5 days after Due Date
Payless notice At least 5 days before Final Date for Payment
Final date for payment. 14 days after Due Date

7 days from Interim Valuation Date to Due Date. 14 Days from Due Date to Final Payment

32
Q

What is the payment timeline for NEC Contracts

A

Assessment Date
Interim Valuation 7 Days
Due Date
Interim certification 5 days
Payless notice
Final Payment 7 days

33
Q

What is the final account?

A

The conclusion of the contract sum and signifies the agreed amount the employer will pay the contractor.

34
Q

Why did you want to avoid negative cashflow?

A
  • Insolvency risk
  • Cannot procure packages causing a programme risk
35
Q

Funding vs Financing

A

Financing is obtaining money for a project. Funding is money provided by an organization or government, for a particular purpose

36
Q

What is meant by the term surity?

A

Someone taking on the risk for another’s performance

RICS Mandatory (12 decks)

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