SOE-Guide-Project Financial Control

What does level 1 look like?

As defined in the RICS Quantity Surveying and Construction Pathway Guide, Level 1 Project
Financial Control and Reporting is about the active cost control of construction projects during the
construction phase.
You should be aware of the principles of controlling and reporting costs on any construction project.
Ensure you have a detailed understanding of the control and reporting processes used on their
projects when you come to apply for Final Assessment.
Level 1 - knowledge and understanding
What's this activity about?
The aim of this activity is to guide you through the more common facts, information and concepts
that you need to demonstrate for Level 1 competence in Project Financial Control and Reporting.
This list is not exhaustive, but it will give you a thorough indication of the knowledge and
understanding you need to demonstrate throughout your RICS membership assessments.
Instructions
1. Read each flip card
2. Select YES if you think this is a piece of knowledge and understanding that you need to be
competent in for Level 1 Project Financial Control and Reporting
3. Select NO if you decide that this knowledge and understanding is not a part of Project Financial
Control and Reporting
4. Watch the card flip over to find out if you're right!
5. Don't forget to read our assessor advice and find out why
What do you need to know and understand to be competent in Project Financial Control and
Reporting?

New Rules of Measurement 1

No: This would be used for cost planning so would fall under the Design Economics and Cost
planning competency.

Day work

Yes: Understanding the implications of Day work within a construction contract is essential
knowledge for managing and reporting on project finances.

You should be able to demonstrate an understanding how day work should be managed and
reported upon during the construction stage.

Anticipated Instructions / Early Warnings

Yes: A cost report will include costs of anticipated change or early warnings. When producing
reports, you need to understand how to value anticipated change to ensure accuracy in cost
reporting and forecasting of the anticipated final sum

Cost Analysis and Benchmarking Guidance Note

No: Cost Analysis and benchmarking would generally fall under the Design Economics and Cost
Planning competency.

Final Account Procedures Guidance Note

Yes: You will need to understand how to assess and report on final accounts. Referencing this
guidance note within your assessments will help you to demonstrate your knowledge and
understanding of how to process a final account and report on its status.

Interim Valuations and Payment Guidance Note

Yes: This guidance note will give you advice on the process of valuing work for interim valuations.
You need to be aware of how valuation sums should be reported within a cost report and make
comment on any risks or issues it highlights, such as progress against cash flow.

Cost Reporting Guidance Note

Yes: Use this as a guide for understanding cost reporting techniques. It sets out how you should
undertake a cost report and identifies the items that would be included. You should be aware of this
document and use it as a basis for cost reporting.
Extensions of Time Guidance Note

Yes: Cost reports are in part used is to update on costs associated with claims.

You will need to recognise the implications of an extension of time and the potential costs which
may arise from it, which this guidance note advises on.

International Property Measurement Standards (IPMS)

No: Measurement would not fall under this competency. Measurement during the construction
stage would generally fall under the Quantification and Costing of Construction Works competency

Cash flow Forecasting Guidance Note

Yes: A cost report would typically include a construction stage cash flow, highlighting actual
progress against it.

You need to know how to undertake a project cash flow and demonstrate awareness on how it can
be used as a management tool for measuring progress.

Valuing Change Guidance Note

Yes: A cost report will include costs of change against the contract sum. Knowing how to value
change for ensuring accuracy in cost reporting and forecasting of the anticipated final sum is
essential for this competency.

Provisional Sums

Yes: You will need to understand the implications of Provisional Sums (defined and
undefined) within a construction contract. This will demonstrate your understanding of how
provisional sums should be managed and reported upon during the construction stage.
 Level 2 - application of knowledge and understanding

What does level 2 look like?

In the RICS Quantity Surveying and Construction Pathway Guide, Level 2 Project Financial Control
and Reporting is described as the active cost control of construction projects during the construction
phase.

You should be aware of the principles of controlling and reporting costs on any construction project.
Make sure you can demonstrate a detailed understanding of the control and reporting processes
used on your projects.

What's this activity about?

The aim of this activity is to guide you through the more common work-based activities, tasks and
experiences that you need to show to demonstrate your application of knowledge. These are the
types of activities and experiences that can be sued will for Level 2 competence in Project Financial
Control and Reporting.

This list is not exhaustive, but it will give you a thorough indication of how you can apply your
knowledge and understanding you need to demonstrate throughout your RICS membership
assessments.

Instructions

1. Read each flip card

2. Select YES if you think this is an activity that you need to have experience of for Level 2 Project
Financial Control and Reporting
3. Select NO if you decide that this activity is not a part of Project Financial Control and Reporting.
4. Watch the card flip over to find out if you're right!
5. Don't forget to read our assessor advice and find out why
What key workplace activities should you complete to be competent in Project Financial
Control and Reporting?

Preparation of a cost report during the design stages

No : Cost reporting during the construction stage would fall under the Design Economics and Cost
Planning competency and be covered by the New Rules of Measurement.

Preparation of a cost report during the construction stage

Yes: Cost reporting during the construction stage would fall under the Project Financial Control
competency. Within assessments, you need to demonstrate your ability to undertake a cost report
showing your understanding of format, frequency and content.

Preparing costs to help inform client budgets

No: Preparation of costs to inform clients’ budgets would fall under the Design Economics and Cost
Planning competency

Reporting on sufficiency of remaining risk allowances on a project

Yes: You should be capable of demonstrating a proactive approach to reporting costs. Demonstrate
to your assessors that you regular reported on the expenditure of risk allowances for a project and
forecasted to ascertain the sufficiency of remaining risk allowances.

Identifying the optimum procurement route for a project

No: Procurement matters would fall under the Tendering and Procurement competency

Reporting on contractors progress against construction stage cash flow

Yes: You need to be aware of how to produce a cash flow and how it can be used as a reporting
tool.

Demonstrate within your assessments that you understand how progress against project cash flows
is measured and reported.

Establishing a change control process on a project

Yes: You need to know how to undertake and administer a change control process. Within
assessment you may be required to demonstrate how a successful change control process provides
greater accuracy in cost reporting.
Managing the expenditure of provisional sums

Yes: Make sure you're aware of how provisional sums should be managed during the construction
stage.

You should be able to talk through how provisional sums are included within their cost reports and
how they are actively managed during the construction process.

Ascertaining a loss and expense claim

Yes: You need to be aware of how to ascertain the value of a loss and expense claim. Potential
claim costs will need to be reported to a client, so you should be able to explain how this would be
undertaken in a cost report.

Preparing a pricing document for tender

No: Preparation of pricing documents for tender would fall under the Quantification and Costing of
Construction works competency.

Preparation of a final account statement

Yes: As part of this competency, you'll need to be aware of how to prepare and agree final
accounts. Defining how progress should be reported and what impact it may have on cost reported
figures is key to financial reporting.

Reporting on Day work allowances

Yes: You should be aware of how day work is best managed during the construction stage. Make
sure you are able to show how you have included day work within your cost report and how it has
been actively managed during the construction process.
 Level 3 - reasoned advice and depth of technical knowledge

What does level 3 look like?

As defined in the RICS Quantity Surveying and Construction Pathway Guide, Level 3 Project
Financial Control and Reporting is about providing advice on strategies and procedures for
controlling your predicted expenditure on a project.

You should be able to implement change control procedures within contracts, establish reporting
protocols and demonstrate within assessments how you have analysed and managed risks when
controlling and reporting on project costs.

What's this activity about?

The aim of this activity is to show you a variety of methods for demonstrating reasoned advice and
the depth of your technical knowledge related to Project Financial Control and Reporting.

You'll see a series of typical conversations that could take place with internal and external
stakeholders alongside written extracts from surveys, reports and written communication.

Instructions

1. Read each conversation or written extract

2. Select YES if you think this is the type of advice that you need to be competent in for Level 3
Project Financial Control and Reporting
3. Select NO if you decide this is not an example of reasoned advice that is relevant to Project
Financial Control and Reporting
4. Watch the card flip over to find out if you're right!
5. Don't forget to read our assessor advice and find out why
Setting the scene 1....

A refurbishment of a listed building project is about to start on site. Your client is enquiring about the
cost reporting process.

Read through the conversation and decide whether you feel this is the type of advice that would
suitably demonstrate level 3 Project Financial Control and Reporting competency.

Person 1: Can you advise on how you will be undertaking cost reporting on the project

Person 2: As the project is only a three month duration and the potential risk around additional cost
use to discovery items is high, I propose to report on costs every two weeks.

Person 1: Why will reporting every two weeks help?

Person 2: We need to ensure any risk expenditure is anticipated and captured at the earliest
opportunity. That allows me to discuss any risks with you and put plans in place if it looks like the risk
allowances are going to be expended before project completion. If we report on a monthly basis over
a short programme, we may miss the opportunity for further mitigation.

Person 1: How will the risk expenditure be captured in the cost report?

Person 2: We will use a drawdown graph to predict likely expenditure over the contract period. We
can then monitor actual progress against this

Person 1: Thanks, please proceed

Does this conversation sufficiently demonstrate level 3 Project Financial Control and
Reporting advice?

Yes: In this scenario, this candidate is able to apply the short programme and high risk profile to an
increased reporting requirement.

They provide their client with step by step advice on measures for how the risk will be monitored and
support decisions with reasoning.
Setting the scene 2....

The candidate has completed a cost plan which is being presented to their client. The cost plan
shows a shortfall in the budget.

Read through the conversation and decide whether you feel this is the type of advice that would
suitably demonstrate level 3 Project Financial Control and Reporting competency.

Person 1: The estimate shows a shortfall in the budget. I suggest we review to identify
opportunities for value engineering.

Person 2: How do you propose we approach this?

Person 1: Can we have a meeting to review the value drivers on the project? I need to ascertain
what elements of the design and scope cannot be changed and which offer opportunity for
amending?

Person 2: How would you propose doing this?

Person 1: I suggest we review at a workshop with the design team

Person 2: Thank you, please proceed with this approach

Does this conversation sufficiently demonstrate level 3 Project Financial Control and
Reporting advice?

No : The conversation in this example relates to the cost planning stage.

In your pathway guides, the description of Project Financial Control and Reporting is described as,
'the effective cost control of construction projects during the construction phase.' So this example
would be suitable for demonstrating your ability to advice in Design Economics and Cost Planning.
Setting the scene 3....

The project is just about to start on site and the client is keen to hear about how you will be cost
reporting.

Read through the conversation and decide whether you feel this is the type of advice that would
suitably demonstrate level 3 Project Financial Control and Reporting competency.

Person 1: Can you let me know your thoughts on how you will be reporting costs on the project.

Person 2: I would suggest we undertake a Project Level Cost Report. That way we can provide the
information you require on Consultant Fees and Direct works. The costs on the non-construction
elements will need to be provided by others, as per our appointment. The report will capture historic
and forecast costs on the construction works.

Person 1: How will the construction costs be captured?

Person 2: I would advise we report on provisional sums, daywork, instructed variations and
anticipated changes. Will we also incorporate claim costs should they arise.

Person 1: How will you advise on the sufficiency of the remaining budget?

Person 2: We will look to forecast costs for all anticipated changes. That will allow us to ascertain
an anticipated final cost, which we will monitor against our remaining risk allowances to ensure we
keep within budget. If this exercise shows a risk of budget overspend, I will advise when I become
aware and we can look at potential mitigation measures.

Person 1: Thank you, please proceed.

Does this conversation sufficiently demonstrate level 3 Project Financial Control and
Reporting advice?

Yes: In this conversation, the candidate has offered advice around the level of detail and content
included within of their report.

He has then offered proactive advice on the procedure used for managing the budget as well as
how he plans to report against project risk allowances, providing the client.

By providing explanations of processes with supporting arguments to show the reasons why they
are used, how they benefit the client and what potential risks can arise with methods for mitigation,
this conversation would clearly demonstrate level 3 Project Financial Control and Reporting.