Hello friends 👋
This week we are covering Level 2 for Project Financial Controls. Here is the link to the Level 1 post if you’ve missed it: Project Financial Controls and Cost Reporting - Level 1.
DISCLAIMER: The following is not an exhaustive set of notes, but it's an attempt to help those who, like me at the beginning, did not know where to start! Please feel free to let me know if I have said anything incorrect or out of date!
So what is Level 2 Project Financial Controls about?
The RICS pathway guide suggests that to effectively demonstrate your competence at this level you must show that you can (at a minimum):
Apply your knowledge to the management of project costs. This should include the preparation and presentation of financial reports on the performance of a project at appropriate intervals, to provide effective forecasting of costs, risks and their financial implications.
Managing project costs during the construction phase
Some of these bullet points are inter-related, bear this in mind!
For this requirement, you need to demonstrate how you have dealt with things like variations, loss/expense etc during a project.
Can you describe the valuation process and the payment process?
Reporting and forecasting costs for different procurement routes and client types
You need to demonstrate that you understand the principles of cost reporting, and how it relates to different procurement methods.
For example, what would the differences in reporting be for a traditionally procured project versus one which was design and build or delivered via a construction management route?
Using cashflows in financial management
Can you describe how you used cashflows to benefit your client?
Where do you obtain cashflow forecasts from?
How did you create your cashflow forecast?
What does it mean if the contractor is spending cash quicker than indicated on their cashflow and your forecast?
What does it mean if the contractor is spending cash slower than indicated on their cashflow and your forecast?
Managing provisional sums and risk allowances.
Do you understand the differences between the two types of provisional sums?
How have you dealt with them in your cost plans and estimates, and how were they dealt with post-contract?
What are risk allowances? What is their purpose and how do you show their expenditure in the cost report? Who owns them in the contract?
The above should give you some ideas of content for the Level 2 bullet points.
As always, if you have any comments or queries, please give me a shout!