Commercial Management | My Assignment Tutor & TECHNOLOGYSensitivity: Internal6HX503 CIVIL ENGINEERING CONSTRUCTIONMANAGEMENTFINANCIAL and COMMERCIALMANAGEMENTTutorial 7BToday’s agenda• Update on Session 7A• Commercial Contracts in Civil Engineering• Financial Managemen• Commercial Management– Cost Value Reconciliation• Your assignment• Some work for discussion next & TECHNOLOGYSensitivity: InternalContracts• What is a contract?• The parties• Types• Changes• Disputes• Good modern approaches e.g.– Alliancing– Partnerships– Joint & TECHNOLOGYSensitivity: & TECHNOLOGYSensitivity: InternalNEC4 Launched 26 June & TECHNOLOGYSensitivity: & TECHNOLOGYSensitivity: InternalThe purpose of planning& control of finances• define purpose of organisational existence:source of motivation and commitment• give direction – guide actions and decisions• co-ordinate effort – minimise waste• reduce uncertainty – anticipate change and theimpact of change• establish standards – define criteria for assessingperformance• facilitate control – identify and correct undesirabledeviation from desired & TECHNOLOGYSensitivity: InternalTHE COMMERCIAL CHALLENGECOST IS A FACTPRICE IS AN OPINIONCASH = & TECHNOLOGYSensitivity: InternalWhy is a well – managed constructionbusiness always cash positive?• Positive cash flow: This occurs when the cash funneling into yourbusiness from sales, accounts receivable, etc. is more than theamount of the cash leaving your businesses through accountspayable, monthly expenses, salaries, etc.• Negative cash flow: This occurs when your outflow of cash isgreater than your incoming cash. This generally spells trouble for abusiness.Do you agree with the starting proposition? & TECHNOLOGYSensitivity: InternalMeasurement is a fact?Valuation is an Art?What can we measure?•% completion of activity•Quantities and Volumesof materials used•Materials on Site•Are variations going to be authorisedfor extra payment? & TECHNOLOGYSensitivity: InternalCost Value Reconciliation (CVR)Concept– Cost Value Reconciliation (CVR) is the practice ofdetermining and reporting profitability of a constructionproject on a regular basis.– By comparing the costs with revenue at a certain date, itis possible to see the difference between the cumulativeprofit or the loss on the project.– Reconciliation is defined as getting two things to correspond: We dothis on a personal basis when we check that our bank statementhas recorded all the cheques that we have written and the moneywe have paid & TECHNOLOGYSensitivity: InternalYour Portfolio• 1 page for Finance and Commercial– Essential systems i.e the law!• Companies Act• Competition Act• Contractual Law– Best Practice• Contracts best suited to your project• Supplier Contracts• Cost Management Systems• 1 or 2 Examples from a work environment• Comments on possible improvement areas as aconclusion to the & TECHNOLOGYSensitivity: InternalTutorial 7B Exercise – ContractRoleplay• Each team splits into 2• 1 side is client 1 side is contractor• Agenda– Update on programme and progress– Access, permit and liaison– Outstanding technical queries– Design and scope changes– Valuation issues– Claims and Variations• REPORT BACK NEXT WEEK ON ISSUES


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