Background information/introduction (how this assessment fits the overall strategy):
The focus of this assessment is on the application of procurement and tendering methods,
consultant/contractor selection, cashflow management for construction projects and preparation of interim valuations and payments.
Question 1 [25 marks]
Fifty-six days before a regional sporting and games festival flooding occurs at Riley Hotel & Leisure (RHL) resulting in damage to premises, facilities, fittings and equipment, loss of stock, and major disruption of business activities. The festival is an annual event attracting several hundreds of people and remains the busiest time of the year for RHL. It is estimated that the management of RHL could lose a profit of about £30,000 per day if accommodation, leisure facilities, services, etc. are not available to cater for demand. The management of RHL is appointing a contractor
to repair the flood damage and to restore the business activities. The contract is initially valued at £1.3 million and has overheads and profit of 13%.
a. You are appointed as a consultant surveyor representing your organisation to advise the management of RHL on the most appropriate contract type, tendering method, and procurement method for the project. [10 marks] [200 words]
b. Assume that the contract is subject to re-measurement and suffers a 10% reduction in the quantity of measured work. Assume a profit of 5% and overheads of 8% (Note: The £1.3 million includes the profit and overheads). Calculate the following:
i. the total overheads and profit in £. [3 marks]
ii. based on (i), determine the overheads and profit in £. [3 marks]
iii. the net total of the measured work. [2 marks]
iv. reduction in measured quantities (work) and the net value of the re- measured work. [3 marks]
v. what is the implication of the 10% reduction in the quantity of measured work on the anticipated profit? [4 marks] [max: 100 words]
(show all calculations where possible)
Question 2 [25 marks]
a. Determine the amount of money due to be paid to the main contractor for interim payment No. Y for the works carried out in June 2022 on a residential development using the project information below. The project is at its practical completion and has a retention rate of 3%.
Facilitating works
- Demolition of existing structures on site: £820,000
- Temporary diversion works: £350,000
Preliminaries
- Time-related charges: 355,000
- Fixed charges: £545,000
Main construction works
- Substructure: £895,150
- Superstructure: £1,950,400
- Internal finishes: £725,300
- Fitting and furnishing: £615,800
- Services installation: £738,400
- External works: £ 174,950
Additional information: Variations to date: £450,000 Materials on Site: £225,000 Previous payments: £2,900,000
Defects liability period: 6 months Standard form of contract: JCT/Q 2016
Show all calculations. All assumptions must be clearly stated (if any).
[12 marks]
b. A contractor’s priced bill of quantities has arithmetical errors. Using the data below, determine the corrected value of the builder’s work and the error adjustment percentage.
• Builder’s work £ 687,134.75
• Prime cost and provisional sums £ 170,788
• Preliminaries £ 130,000
The correction of the errors makes the tender sum £ 978,912.50.
[5 marks]
c. State and briefly discuss the approaches for correcting errors in a priced bill of quantities. [8 marks] [max: 200 words]
Question 3 [50 marks]
You are the project surveyor on student hostel development and have been asked by the commercial director to produce a cash flow forecast for the project. The project’s duration is 10 months, commencing in April 2022 and completing in January 2023. The contract sum is £3.3 million with a rectification period of 4 months. A retainage of 2.5% and a billing period of four weeks apply to the contract. The contractor’s margin for profit and overheads on the project is estimated at 10%. Interim payments are to be made based on work done according to interim valuations at the end of each calendar month. Based on the contractor’s programme, the monthly payments to the contractor are shown in Table 1.
Table 1 Monthly payments received (forecast)
Valuation no. Monthly payments (£)
Month 1 98,940
Month 2 180,420
Month 3 152,290
Month 4 392,850
Month 5 339,500
Month 6 679,000
Month 7 523,800
Month 8 397,700
Month 9 324,950
Month 10 161,050
a) Using the information provided, calculate the following:
i. Cumulative gross valuations based on work done
ii. Cumulative net valuations
iii. Cumulative costs incurred
iv. Monthly costs incurred
v. Monthly retention amounts
[15 marks]
b) Using a graph sheet or MS Excel spreadsheet or another programme, plot the following S-curves:
i. Value-time curve
ii. Cost-time curve
iii. A 4-week payment delay in meeting cost
c) Graphically represent the following:
i. Saw-tooth red
ii. Saw-tooth black
[12 marks]
[13 marks]
d) Discuss two uses of cash flow forecasts for construction projects. [10 marks] [200 words]
Assessment Criteria: Allocation of Marks
Question 1: 25 marks
Question 2: 25 marks
Question 3: 50 marks
Total marks 100%
Instructions to students
- All calculations should be clearly shown (where appropriate).
- Assumptions must be reasonable and clearly stated.
- A critical discussion is required, supported with academic literature [for written sub-questions].
