3.3 Project Finance

Question 1

What is a cashflow forecast?

Answer 1

Incoming and outgoing cash for a set period of time. Can be for both copmany or construction project.

Question 2

What are the uses of a cashflow forecast?

Answer 2

Obtaining loans from the bank
- Track progress on site
- Managing cash and resources in the business
- Forecasting business perfomance

Question 3

Final account process for NEC?

Answer 3

Sorted as project progresses. All CEQ implemented. Price of work done to date must be agreed and certified. Final Certificate is issued.

Question 4

What is a cost to complete and its use?

Answer 4

Granulated forecast of cost required to complete the project. Used to report and gain an understanding of project final position.

Question 5

What is an accrual?

Answer 5

Expensed incurred that have not yet been reflected.

Question 6

Change management within NEC suite?

Question 7

What is a CVR?

Answer 7

Comparing the internal valuation with the costs incurred, including liabilities and accruals.

Question 8

What is WIP?

Answer 8

The difference between the external and internal valuations is usually referred to as ‘over/under measure’, although accountants will tend to describe it as positive or negative ‘work in progress’ (WIP).

Question 9

What are Early warnings?

Answer 9

Clause 15

Question 10

What are the risk quantification methods as per the “management of risk” black book?

Answer 10

Probability tree
Central limit Theorem
Monte Carlo
Percentage addition
Simple Method
Probabilistic

Question 11

What are programme requirements under NEC?

Answer 11

Clause 30

Question 12

How do you control costs in a project?

Answer 12

• Reduce Spec
• Reduce quantity
• Descope
• VE/VM