RICS Assessment of Professional Competence (APC) Quantity Surveying and Construction Flashcards

24 sample cards from the Quantity Surveying and Construction deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What is an extension of time (EOT) and why is it important to both parties?

   An EOT is a contractual adjustment moving the completion date later due to delay caused by a Relevant Event. It protects the contractor from liquidated damages for excusable delay and preserves the employer's right to levy liquidated damages by keeping a definite completion date in place (avoiding 'time at large').

2. Name the common delay analysis methods used in EOT and disruption claims.

   As-planned versus as-built; impacted as-planned; time impact analysis (TIA); collapsed as-built (as-built but-for); and windows analysis. The SCL Delay and Disruption Protocol provides guidance on their selection and use.

3. What is the difference between concurrent delay and culpable delay?

   Concurrent delay is where two or more delays (one the employer's risk, one the contractor's) operate over the same period. Culpable delay is delay for which the contractor is responsible and which is not excusable, exposing the contractor to liquidated damages.

4. What are liquidated damages (LDs) and what is the key legal test for their enforceability?

   Liquidated damages are a pre-agreed sum payable by the contractor for each period of culpable delay beyond the completion date. They must be a genuine attempt to reflect the employer's likely loss; following Cavendish v Makdessi, they are unenforceable as a penalty only if they impose a detriment out of all proportion to the employer's legitimate interest.

5. What is a final account and what is its purpose?

   The final account is the agreed statement of the total adjusted contract sum payable to the contractor on completion. It reconciles the original contract sum with all additions and omissions (variations, provisional sums, fluctuations, loss and expense, remeasurement) to establish the final amount due.

6. What is a provisional sum and how are 'defined' and 'undefined' provisional sums treated?

   A provisional sum is an allowance for work not fully designed at tender. For a defined provisional sum the contractor is deemed to have allowed for programming and preliminaries (no EOT/extra prelims). For an undefined provisional sum the contractor has not, so EOT and additional preliminaries may be due when the work is instructed.

7. What is retention, and what is the typical mechanism for its release?

   Retention is a percentage (commonly 3-5%) withheld from interim payments as security for performance. Typically half is released at practical completion and the remaining half at the end of the rectification/defects liability period once defects are made good and the final certificate issued.

8. What activities are involved in contract close-out at practical completion and final certificate?

   Issuing the practical completion certificate, releasing first half of retention, commencing the rectification period, agreeing the final account, issuing the final certificate (releasing the balance and remaining retention), handing over O&M manuals/as-built information, and resolving outstanding claims/defects.

9. What is cost value reconciliation (CVR) from a contractor's perspective?

   CVR is the contractor's internal periodic comparison of the value (income/turnover earned) against the cost (actual spend) of the works to determine the true profit or loss on a project and to identify variances, accruals and provisions before they materialise.

10. Write the basic profit relationship used in cost value reconciliation.

    $$\text{Profit (or loss)} = \text{Value (turnover)} - \text{Cost}$$ where value is the amount earned for work done (often the certified or internally assessed value) and cost is the actual and accrued cost of achieving that work.

11. What is a cash flow forecast and why does a contractor and client each prepare one?

    A cash flow forecast projects the timing and amount of money flowing in and out over the project. The client uses it to plan funding and certify-payment timing; the contractor uses it to manage working capital, finance costs and to avoid insolvency from negative cash position. It is commonly shown as an S-curve.

12. Why does a project's cumulative cash flow typically form an S-curve?

    Expenditure is slow at the start (setup, substructure), accelerates through the main construction phase as activity peaks, then tapers off near completion (finishes, snagging). Plotting cumulative value or cost against time therefore produces an S-shaped curve.

13. What is earned value management (EVM) and its three base measures?

    EVM integrates scope, cost and schedule to measure performance. Its measures are: Planned Value (PV/BCWS) - budgeted cost of work scheduled; Earned Value (EV/BCWP) - budgeted cost of work performed; Actual Cost (AC/ACWP) - actual cost of work performed.

14. Write the formulas for cost variance, schedule variance, CPI and SPI in earned value.

    $$CV = EV - AC, \quad SV = EV - PV$$ $$CPI = \frac{EV}{AC}, \quad SPI = \frac{EV}{PV}$$ A value $> 1$ for CPI/SPI (or positive variance) indicates under budget/ahead of schedule; $< 1$ (or negative) indicates over budget/behind schedule.

15. How is Estimate at Completion (EAC) calculated in earned value when current efficiency is assumed to continue?

    $$EAC = \frac{BAC}{CPI}$$ where BAC is the Budget at Completion. The Estimate to Complete is $ETC = EAC - AC$, the forecast remaining cost to finish the work.

16. Distinguish risk from uncertainty in construction cost management.

    A risk is an event that can be identified and to which a probability and impact can be assigned (allowing quantified allowance). Uncertainty refers to events that cannot be readily foreseen or quantified. Risk allowances target known risks; broader contingency or design development allowances cover uncertainty.

17. What four categories of risk allowance does NRM1 identify in an estimate?

    1) Design development risks; 2) Construction (site/works) risks; 3) Employer change risks; 4) Employer other risks. Each is quantified and held in the estimate/cost plan as a risk allowance rather than a single arbitrary percentage.

18. What is the difference between a contingency and a risk allowance?

    A risk allowance is a quantified sum derived from assessing specific identified risks (probability $\times$ impact). A contingency is a more general sum (often a percentage) held to cover unforeseen items. Modern practice (NRM1) favours quantified, risk-register-based allowances over arbitrary contingency percentages.

19. How is the expected monetary value (EMV) of a risk calculated for a risk register?

    $$EMV = P \times I$$ where $P$ is the probability of the risk occurring (0 to 1) and $I$ is the cost impact if it occurs. Summing EMVs across the register gives a quantified risk allowance; Monte Carlo simulation can refine this for correlated risks.

20. What is insolvency in a construction context, and what are its main legal forms for companies?

    Insolvency is the inability to pay debts as they fall due or having liabilities exceeding assets. Main forms for companies: administration, company voluntary arrangement (CVA), receivership/administrative receivership, and liquidation (winding up, voluntary or compulsory).

21. What contractual steps and protections are relevant when a main contractor becomes insolvent?

    Termination provisions are triggered; the employer takes steps to secure the site and materials, may call on performance bonds and parent company guarantees, rely on retention and retention of title clauses, use collateral warranties/third-party rights and step-in rights, and assess completion cost to set off against sums owed before any final payment.

22. How do retention of title and vesting/off-site materials clauses help recover monies on insolvency?

    Retention of title means a supplier keeps ownership of materials until paid, complicating the employer's claim to unfixed goods. Vesting certificates and proper off-site materials clauses transfer ownership to the employer once paid for, protecting the employer's interest in materials if the contractor becomes insolvent.

23. What is a performance bond and how does it assist recovery of monies?

    A performance bond is a guarantee (usually from a bank or surety, often around 10% of contract value) that pays the employer a sum if the contractor defaults or becomes insolvent, helping offset the additional cost of completing the works. It may be 'on demand' or 'conditional' (requiring proof of loss).

24. On contractor insolvency, how does the employer typically establish the net sum owed or due?

    By calculating the cost to complete the works with a replacement contractor plus other losses (delay, additional fees), then setting this against the contract sum that would otherwise have been payable. If completion costs exceed the remaining contract value, the balance is a debt claimed from the contractor/insolvency estate or recovered via bonds/guarantees.

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