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Tom APC 2023 > Project Finance > Flashcards

Project Finance Flashcards

1
Q

What is a provisional sum

A

An allowance for an element of the works that is not defined in enough detail for tenderers to accurately price

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2
Q

What’s the difference between defined and undefined prov sums

A

The contractor is expected to incorporate defined prov sums into their:

Programme
Prelims
OH&P
Design risk

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3
Q

What’s the disadvantage to the client of undefined prov sums

A

The contractor may be entitled to an EoT and/ or additional payments when the works are undertaken

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4
Q

What’s a prime cost sum as per NRM1

A

A supply only rate for materials or goods

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5
Q

What costs does a prime cost sum exclude

A

Labour

Materials required for installation

Design fees

Prelims

OH&P

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6
Q

What are fluctuations

A

Financial adjustments made to the original contract to compensate the contractor for inflation

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7
Q

What’s the final account

A

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

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8
Q

What’s the purpose of a final account meeting

A

To focus on agreeing the outstanding items.

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9
Q

What are the main headings in a final account statement

A

Contract Sum

Contract instructions

Provisional sum adjustments

Loss and expense

Liquidated damages

Fluctuations

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10
Q

What are Daywork allowances

A

Monetary allowances made for the costs of labour, plant and materials for ad-hoc work required throughout the contract where valuing by reference to contract rates isn’t appropriate.

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11
Q

Define change control

A

The administrative process that implements the contract mechanisms for instructing change

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12
Q

How are daywork allowances tracked

A

Daywork sheets submitted by the contractor and signed off by the CA and reported on a monthly basis

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13
Q

What’s the definition of a variation

A

Any change to the contract specs or drawings

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14
Q

Define contract instruction

A

The financial adjustment arising from instructions for variations to the contract works

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15
Q

Define loss and expense

A

Additional costs incurred by the contractor arising from delays or the disruption to the performance of the contract caused by the employer

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16
Q

What date in the contract are fluctuations calculated against

A

Base date

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17
Q

When is the 2nd retention release due

A

After the defects liability period

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18
Q

How is the 1st retention release dealt with if the final account Isn’t agreed but PC has been issued

A

The Employer is entitled to release only up to the amount they believe is payable under the contract until the final account is agreed

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19
Q

Whats the difference between patent and latent defects

A

Patent defects can be discovered via reasonable inspection

20
Q

What would the preferred scenario be for dealing with a defect prior to issuing a final account

A

Alert the contractor of the defect and give them the opportunity to make good. The final account can then be agreed as if the defect didnt happen

21
Q

What happens if the contractor doesnt make good a defect prior to issuing the final account

A

The Employer can employ a different sub-contractor and then deduct the cost from the final account

22
Q

How is a defect dealt with during the defects liability period

A

The contractor has the chance to make good at their own cost. If the defect isn’t dealt with then a separate contractor can be appointed and the cost deducted from retention

23
Q

How are liquidated damages deducted from the final account

A

Pay less notice

24
Q

Whats set off/ contra charging

A

Where the employer recovers costs from the contractor that he contractor has caused the employer to incur

25
Q

What is the standard amount of time under a JCT that the final account should be issued

A

No later than 3 months after receipt of information supplied by the Contractor (can be amended)

26
Q

What info should the contractor provide to ascertain the final account

A

Substantiation of variation figures

Subcontractor quotes (if applicable)

Daywork sheets

Loss and expense claims

Build up of fluctuations

27
Q

How long does the contractor have to issue their information from PC in preparation of the final account under a JCT

A

3 months

28
Q

If a final account cannot be agreed (in dispute) what are the next steps

A

Ideally mediation if not adjudication then arbitration/ litigation

29
Q

What are the 4 most common reasons for not agreeing a final account

A

Validity of claimed variations

Value of variations

Liquidated damages

Loss and Expense Claims

30
Q

What should be carried out in order to ensure the final account is fair

A

An audit of final accounts

31
Q

Why would final accounts need settling in the middle of a project

A

If the contractor or employer is going into liquidation or administration

Contract is being terminated

32
Q

Whats the purpose of a cost report

A

To inform the client of the forecast cost at a given time

33
Q

What are the typical financial cost report headings on your Leeds D&B scheme

A

Contract sum

Variations (instructed and anticipated)

Loss and Expense/ Liquidated Damages

Provisional Sums

Risk allowance

34
Q

What should the QS review to identify anticipated variations

A

Instruction requests issued by the contractor

Drawing revisions

Spec revisions

35
Q

Up to which point should the cost report apply fluctuation amounts

A

Up to the value of work carried out to date

36
Q

Which 3 courses of action can be taken in the case of cost increases above the brief or approved budget

A

Omit elements of remaining work that aren’t critical for the buildings function

Reduce the scale of remaining elements

Reduce the spec of the remaining work

37
Q

What should be considered when advising the client of the whole life impact of potential cost savings

A

Capital costs saving

Renewal cost and frequency impact

Operating costs

Maintenance costs

End of life cost

38
Q

What should be considered when advising on the impacts of potential cost saving methods

A

Programme impact

Other cost element impacts

Statutory compliance

Asset value impact

Funding conditions

39
Q

What’s the formula for calculating a prime cost sum

A

Prime cost = Raw materials + Direct labour

40
Q

Do prime costs include labour for workers who directly contribute to the formation of the product

A

Yes

41
Q

What are the high level cost report headings on your Leeds project

A

Title
Contents
Exec Summary
Finance overview
Detailed finance review
Cashflow
Project Risks

42
Q

Name some finance costs (monitoring)

A

Interest
Valuation costs
Arrangement fee
Exit fee
Monitor fees

43
Q

Are liquidated damages a penalty

A

No

44
Q

When can liquidated damages be levied

A

Upon issue of a cert of non completion

45
Q

What’s it’s called when the contract completion date has passed without an extension of time

A

The contract is at large

46
Q

If a contractor says they’re in delay what can you suggest they do to get the programme back on track

A

Accelerate

Re sequence

Use float

47
Q

How can you check that the contractor is in delay against their programme when they request an EoT

A

Review progress against the critical path

Tom APC 2023 (17 decks)

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