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ENCN371 > Eric > Flashcards

Eric Flashcards

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1
Q

Procurement

A

The framework within construction is brought about, acquired or obtained

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2
Q

Contract Administration

A

Handling of the business relations between the parties to the contract

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3
Q

NZ Court System (High to Low)

A

Supreme Court, High Court, District Court

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4
Q

Building Act 2004 Objectives

A

Regulate building work, establish licensing practice, set performance standards

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5
Q

CPEng NZ 2002 Objectives

A

Registration system, quality control, code of ethics, complaints and disciplinary procosess

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6
Q

Construction Contracts Act 2002 Objectives

A

Protect retentions money, fair payment regime, fast and cost-effective dispute resolution

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7
Q

Contracts Contain:

A

Promise between capable parties, creates obligation, enforceable by law

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8
Q

Privity of contract

A

Only parties to a contract can sue

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9
Q

Elements of contract

A

Offer, acceptance, consideration, intention to be bound, capacity, reality of consent, legality

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10
Q

Rules of contract

A

Do what contract tells you to do, do not do what the contract tells you not to do

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11
Q

Tender award metrics

A

Lowest price, best qualified, best proposal at stipulated price, best value

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12
Q

Delivery model for high risk/complexity and large scale

A

Alliance

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13
Q

Delivery models for increasing risk, complexity and scale

A

Measure and Value, Design-Bid-Build, Design-Build

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14
Q

Design-Bid-Build Contracts

A

Architect/Engineer to Owner, Owner to General Contractor

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15
Q

Design-Bid-Build Advantages/Disadvantages

A

A: price fixed, the contractor takes risk, low owner involvement
D: long delivery time, low margins for contractor

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16
Q

Project Manager Agent Contracts

A

Architect/Engineer to Owner, Owner to General Contractor, Owner to Project Manager

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17
Q

Project Manager Agent Advantages/Disadvantages

A

A: low owner involvement, contractor sets price, best value, no risk for PM
D: Contractor assumes risk, high risk for contractor, low margins

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18
Q

Design-Build Contracts

A

Owner to Design-Builder

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19
Q

Design-Build Advantages/Disadvantages

A

A: Claims reduction, react rapidly to scope changes
D: Selection difficulty, large staff, additional risk

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20
Q

Alliance Characteristics

A

Major contarctors/consultants become stakeholders and share the gain/loss
Open book costing
Risk shared

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21
Q

PPP Characteristics

A

Public Private Partnership
- Large scale ($50 milllion +)
- Duration (25-35 years)
- High complexity

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22
Q

Design-Bid-Build Contract types

A

Lump Sum
Measure and Value
Cost Reimbursement

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23
Q

Cost Risk Sharing (Guaranteed Maximum Price)

A

Principal shares in cost savings if less than GMP
Contractor will not be paid more if it is in excess of the GMP

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24
Q

NZS3910 Bonds

A

The contractor provides a bond of 5-10% of the contract value to ensure performance under the contract
Provided within 2 months of tender acceptance

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25
Who assumes the risk of a subcontractor?
Principal
26
Dual role of the engineer
Expert advisor to and representative of the principal Independently value work and issue certificates
27
Who grants contractor time extension?
Engineer
28
Valid reasons for time extension
Any circumstance not reasonably foreseeable by an experienced contractor at the time of tendering and not due to the fault of the contractor
29
Construction Cost Estimate
Determination of probable costs of any given project
30
Parametric estimating
Top-down: The project is divided into units of work, cost per unit is determined to calculate the total cost
31
First Principles Estimate
Bottom-up: The process of building up prices and rates for an item or piece of work
32
What percent of construction does labour cost make up?
30-50%
33
Why is labour cost difficult to estimate?
Labour productivity rates vary and depend on: Market and Environmental conditions Work and Management Conditions
34
Direct Cost Definition
Permanently and physically integrated into the building
35
Indirect Costs Defintion
Items required to support construction efforts
36
Contingency Definition
Amount added to an estimate to cover unforeseen needs of project, construction difficulties and estimating accuracy
37
Describe Porter's Five Forces Model
Industry competitors in centre with buyers, suppliers, potential entrants and substitutes around it
38
Prisoners Dilemma Outcome
Nash Equilibrium is where prisoners choose the least negative outcome even though this is not the optimal outcome
39
Ways of reducing uncertainty
Law, contracts, accounting, project/asset management, human behaviour monitoring
40
Accounting Definition
The preparation of accounting records, analysis and interpretation of financial statements
41
Economics Definition
Study of choices made by people who are faced with scarcity
42
Two rules of finance
- A dollar now is worth more than a dollar tomorrow - A certain dollar is worth more than a risky dollar
43
Forms of business in NZ
- Sole trader - Partnership/Joint Venture - Companies
44
Structure of Companies
Shareholders -> Board of Directors -> Top Management -> Staff
45
CEO, COO, CFO Roles
CEO responsible for COO and CFO COO responsible for HR/Marketing Departments CFO responsible for monetary/investing/accounting relations
46
Payback Period
Time until cash flows recover the initial investment of the project
47
Payback Rule
Accept project if its payback period is less than the specified cut-off period
48
Limitations of the payback rule
Profit margins and time value of money are not taken into account
49
Net Present Value Rule
Accept all projects with a positive net present value
50
Income Statement Purpose
Show whether a business is profitable (shows profit and loss)
51
Gross Margin
Revenue - Cost of Sales
52
Operating Profit
Revenue - Cost of Sales - Operating Expenses
53
Profit before income tax
Operating Profit - Financing Costs
54
Balance Sheet Purpose
Show a company's financial position at the end of a fiscal year. Contains assets, liabilities, and equity
55
Current Assets
Cash, materials, investments, accounts receivable
56
Fixed Assets
Property, equipment (not liquid)
57
Current Liabilities
Accounts payable, expenses, bank overdraft
58
Long-term Liabilities
Bank loans, mortgages
59
Equity equation
Total Assets - Total Liabilities
60
Working Capital
Current Assets - Current Liabilities
61
Current Ratio and Magnitude
Current Assets / Current Liabilities > 1.3
62
Gross Profit Margin Ratio
Gross Profit / Revenue
63
Net Profit Margin Ratio
Net Profit / Revenue
64
Return on Equity Ratio
Net Profit / Owner Equity
65
Acid Test Ratio
(Cash + Accounts Receivables) / Current Liabilities
66
Working Capital Turnover
Revenue / Working Capital
67
Break-even point
Income from sales = Total expenses
68
Break-even point equation
Fixed Costs / (Price - Variable Costs)
69
Increase profit by
Increasing number of units sold or price, decreasing variable and fixed costs
70
Costing Methods Objective
Assigning Overhead
71
Three Co-Equal Arms of Government
Legislature, Executive and Judiciary
72
Legislature in NZ
120 MPs who pass statutory acts (Supreme Law)
73
Executive in NZ
Government Departments, Ministries, Councils and Universities Pass secondary legislation
74
Judiciary in NZ
Senior and Lower Courts Rule on matters of the law
75
Acceptable Solution Compliance
Compliance with an acceptable solution or verification method will comply with the building code, however they are not the only way
76
Limitations of Return on Investment
No account for time value of money or the size of the project
77
Are productivity rates specified in an estimate
No
78
Gross Profit
Profit before Income Tax - Financing Costs
79
What does a low order cut set represent?
High safety vulnerability

ENCN371 (2 decks)

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