Project Financial Control and Reporting Flashcards
(15 cards)
What is the purpose of a financial report?
To monitor the cost (spend + progress) performance against the budget.
What is included under a financial report?
- Executive Summary
- Dashboard
- Contracts let
- Implemented variations
- Anticipated Changes
- Unspent Budget
- Claims
- Anticipated final cost
- Risks
- Cashflow forecast
- Paid to date log
What is cost?
The amount attributed to labour, plant and material.
What is price?
Cost with markup (OH&P) that a client or customer pays for.
What does a cost report help with?
- Monitoring and controlling the project budget through:
- Tracking issues which impacts cost on the project
- Monitor budget, anticipated final cost and spend to date
- Identify unspent budget or contract allowances
- Know what are the committed and uncommitted costs
- Identify what risk items can impact the outturn cost
What is the purpose of the risk register?
To monitor and manage events which can impact the time, cost or quality on a project.
Risks are identified, their impacts are described and mitigation measures. The likelihood and severity of the event is also monitored and a risk budget is assigned.
What are some of the reasons for cost overruns on a project?
- Uncoordinated design
- Change in Employer’s objectives/ requirements
- Design which does not comply with the tendering strategy
- Poor Project Management
- Risk allocation is ambiguous
- Unrealistic cost estimates
What is a cashflow forecast?
Showing the movement of money in and out of a project.
How is a cashflow forecast created?
It is usual produced in a tabular or graphical form where the cost incurred associated to a project is shown as per the timings shown under the project programme. Forecasts and actuals are recorded, which is usually shown under a graph in the form of an “S Curve”.
Is a flat spread on a cashflow realistic?
It is unrealistic, as it does not show periods of high cost where significant construction output has been delivered. The cashflow should be forecasted as per the activities on the programme, and shouldn’t be front loaded or back loaded.
What does the cash flow of a Main Contractor typically reflect, and how does it differ from the cash flow of a Client?
A Main Contractor’s cashflow will show their preliminaries and subcontractor works costs.
A Client cashflow will show further costs, such as consultant fees, legal fees, insurances, etc.
What are the benefits of a cashflow?
- Allows for Employers to know how much to budget for throughout the course of the project.
- Allows to monitor project performance
- Supports with preventing cashflow insolvency
If Actuals/ Payments are behind the cashflow forecast, what does that indicate?
It would imply the project was behind schedule, or under budget.
If Actuals/ Payments are above the cashflow forecast, what does that indicate?
It would suggest that the contractor is ahead of schedule, or going over budget.
Name some of the factors affecting a cashflow forecast?
- Long lead items procurement
- Front loading/ back loading
- Advance Payment and recovery of advance payment
- Retention and release of retention
