The Open University of Sri Lanka

P.G. Diploma in Construction Management Programme Level 7

CEX 7108 Cost Control and Cash Flow in the Construction Industry
Assignment 2- Academic year 2017

Submit answers to: Course Coordinator CEX 7108,

Department of Civil Engineering, The Open University of Sri Lanka, Nawala, Nugegoda.
______________________________________________________________________
Date of submission as indicated in the Activity Diary or amended thereafter.
Answer all questions with assumptions stated clearly.
Refer your hand out on General Information. Type written answers are expected.

Q1.

(a) List and explain the data required to prepare a cash flow forecast of a construction project at pre tender stage.

(b) When calculating variances at the end of six months on a construction site of a road construction project, it
is found that there is an adverse variance for the item construction materials. List & explain possible
reasons.
Q2.

(a) Discuss possible steps to be taken to make the contractors in Sri Lanka understand the importance of cash
flow forecasting.

(b) A Client requires a 20 bed roomed, three-star hotel to be designed in close proximity to the sea coast. As the
Consultant for this project, list the steps you would take to minimize the overall cost of this project by
making use of the Value Engineering concept at the design stage.

Q3.

(a) Explain how Claims affect a Contractors cash flow. Why is it important to separate out Claims when
assessing the achieved margin in a construction contract?

(b) Draw and explain the cash curves giving information most useful to a Contractor.
What is the cash curve used by the Client/Consultant and how does he make use of the curve?

(c ) Compare and contrast cash flow forecasting at Corporate level and Project level for a company handling
construction projects.
Cash flow forecasting is important because if a business runs out of cash and is not able to obtain
new finance, it will become insolvent. ... As a result, it is essential that management forecast
(predict) what is going to happen to cash flow to make sure the business has sufficient funds to
survive.
(c ) Compare and contrast cash flow forecasting at Corporate level and Project level for a company handling
construction projects.

Cash flow forecasting is important because if a business runs out of cash and is not able to obtain new finance, it
will become insolvent. ... As a result, it is essential that management forecast (predict) what is going to
happen to cash flow to make sure the business has sufficient funds to survive.