CONTRACT LIABILITIES & RECEIPTS

1.0 PREFACE

This Procedure identifies the requirements to track financial liabilities and payments on projects which have been substantially closed out with regard to manning and project reporting, but where liabilities and payments are still very relevant. This will be updated by the Project Manager and reviewed quarterly at the Project Review Meeting by Senior Management, until all financial issues on the project are closed out.

2.0 PROCEDURE

2.1 Forecast of Contract Liabilities and Receipts Form

In order that the contract financial liabilities and any risk and reward (gainshare) consequences are tracked from project initiation stage to project close out, the following key information is recorded and tracked on the standard form 01

(i) Project Details - Project Number, Project Name, Project Manager.

(ii) All key completion dates that have contractual financial implications associated.

(iii) Outstanding invoices and payments.

(iv) Gainshare - Expected value of any risk and reward gainshare or penalties and when they are due for release/payment.

(v) Ongoing liabilities and warranties with their expiry dates.

(vi) Provision status - the forecast of provisions that remain under the control of the Financial Director.

(vii) Bonds and guarantees - type, value and expiry date.

(viii) Remarks column for any other relevant information

The Project Control Manager will maintain an up-to-date set of all contract liability statements for essentially completed projects, will issue quarterly to respective Project Managers for update and will issue the updated set of summary reports quarterly to the attending Directors 24 hours prior to the review meeting.

The Project Control Manager will also keep record of all dates associated with payments, bond and guarantee releases etc. and will trigger appropriate action with the Project Manager and/or Senior Management at the due date.

2.2. Timing

The standard form, which is in Excel format, will be completed quarterly and returned to the Project Control department one week before the Project Review Meeting, with narrative detailing the period variances. The form will be tabled at the end of the Project Review Meeting until all financial issues on the project are closed out.

The reviews will be quarterly and scheduled for the following Project Review Meetings:

December Review (End November cut-off)

March Review (End February cut-off)

June Review (End May cut-off)

September Review (End August cut-off)

This has been done so that the results can be fed into the Corporate Financial Accounting calendar.

REFERENCES

Contract Liability Spreadsheet