Project finance for construction.

Abstract

This book is aimed at practitioners, and under- and post-graduate students in construction. Whilst of particular interest to quantity surveyors and others who deal with project finance, it is relevant to sister disciplines such as construction managers, architects, architectural technologists, building surveyors and civil engineers. It is argued those professionals in construction who do not gain at least a good appreciation of finance exclude themselves from decision-making tables. The text takes an overview of project finance from inception through to final account and life cycle. Early chapters deal with project appraisals from the perspective of employers and design teams. Methods of establishing budgets are detailed, and options for procurement methods explored; it may be in modern methods of procurement that contractors and lower-tier suppliers support design teams in forming budgets. Value management is explored in the context of considering the cost of alternative design solutions. The internal financial control systems of contractors are examined, from initial bid stages through to the construction phase and beyond. The two separate issues of how to control costs and cashflow are described. The cost of employing labour directly and subcontracting are compared. There are sections on payment procedures, bonds, insurances, retentions and discounts. Insight is given into the role of the Chartered Accountant at the head office of designers and contractors. Whilst having no construction expertise, accountants often have seats on boards of directors and drive many business decisions that impact upon the work of professionals at project level. Investment appraisal techniques, raising finance and corporate accounts are all examined. Examples are provided of accounting ratios that are used to make judgements about the success of companies. Construction professionals and part-time students may often find themselves in the midst of liquidations, mergers, acquisitions or take-overs; this may be at their own companies or companies higher or lower down supply chains. Insight is given into these issues, from the viewpoint of partners or company directors. References are made to both the JCT (2011) Standard Form of Building Contract and the New Engineering Contract (NEC3). Throughout the text there are discussion points, exercises and tasks. Model answers are given at the end of chapters. Acknowledgement: the authors are grateful to Dr Jason Challender who has provided valuable feedback during production of the book.