Project Monitoring and Audit

Introduction

Capital Point’s primary goal is to provide services throughout the investment cycle. Asset management is a critical component of this cycle. Capital Point also assists clients in asset management by closely monitoring projects. We are currently monitoring close to 50 projects in India across technical, sales, and financial scopes.

We have developed various monitoring models over the years. It ranges from yearly monitoring to daily monitoring by dedicated site staff. Our primary goal is to identify specific risks to the project and investment in order to recommend the appropriate model for monitoring.

Scope of Services of Project Monitoring and Audit

Monitoring in General
  • An overview of the project’s current status
  • Marking critical activities
  • Photographs of progress
  • Design progress
Monitoring on a Timeline
  • Examine the Master Schedule
  • Progress report, Milestones, and critical path
  • Monitoring milestones (primarily slab casting) against the overall schedule
  • Analysis of schedule delays and recommendations for corrective measures
  • The impact of critical activity delays
  • Identifying non-critical activities on the verge of becoming critical
  • Comments / suggestions on the next quarter’s schedule
  • Examine and assess the status of available resources (material, labour and machinery)
  • Design change tracking
Construction Cost Estimation / Budget Control
  • Examining cost consultant processes and output and making recommendations
  • A summary of construction costs incurred to date – The developer will share the details in the format agreed upon.
  • Cost deviation from the business plan
  • Cost estimate for completion
  • Design change tracking – The developer will only share the tracker if there are changes.
Contract and Payment Tracking
  • Review of supporting documents for construction-related payments
  • Check reception and Quality Acceptance of Goods / Work Certification
  • Remarks on Authorization, Recoveries, and Advance Settlement
  • Bank guarantees and performance guarantees are monitored.
  • Examine compliance with PO / WO terms
Monitoring RERA Compliance
  • Regulatory overview, including the impact of RERA on potential delays in the completion of the property’s construction and the remedies available.
Maintaining the Business Plan
  • Review the Project SPV’s Business Plan
  • Examine the assumptions in the business model.
  • Understand the major financial highlights in the Loan agreement/Sanction letter, for example.
  • Gain an understanding of, and comment on, the assumptions used in the business model provided by you in respect of
  • Debt management and fund utilisation
  • Obligations to repay principal
  • Rates of interest and resets
Sales Tracking
  • Customer Agreements are being reviewed based on the sampling method.
  • Assets are in compliance with the agreed-upon threshold for the Basic Sale Price (BSP) and other charges such as preferential Location Charges, Car Parking Charges, Infrastructure Charges, and so on.
  • Examine new sales, bookings, and allotments, as well as booking forms, to ensure compliance with the agreed-upon booking process.
  • Sales performance review, comparison of actual vs. planned sales
  • Reconciliation of assets’ final payments and receivables (pre hand over compliances)
  • Identifying non-critical activities on the verge of becoming critical
  • A detailed examination of scheme sales
  • Transfer and cancellation reviews, sales commission/brokerage, discounts, and collection
  • Sales validation in the MIS
Receivables Audit
  • Examine the Mapped Sales collection in accordance with the construction schedule, including progress payments, interest, and late payment charges, if applicable.
  • Delayed receivables ageing analysis
  • Receipt reconciliation against customer ledgers
  • Compare payments demanded versus payments collected, and comment on customer penalties
  • Review of any deviations from the waiver and exemption policy
Reconciliation of Bank ESCROW Accounts
  • Obtain all bank escrow account statements for the project SPV and analyse them for inward and outward transactions.
  • Collections of sales
  • Transfer of funds for project/construction activities
  • Map and compare actual construction expenses with payments made through ESCOR A/c.
  • Characteristics of other transfers
  • Discuss major transfers (both inward and outward) and their relationship to the project.
  • Reconciliation of amounts received versus sales, as well as comments on the accuracy of such booking
Financial Monitoring
  • Review and comment on the cash flow statement as per the Business Plan Model, highlighting key sources of funds used and commenting on the ‘headroom’ available based on total available funds.
  • Review and reconcile bank account statements, and comment on major transfers (inward and outward) and their relationship to the project.
  • Examine security coverage, DSRA, and interest/coupon servicing capability.
Compliances
  • Review of Statutory Compliances such as TDS, GST, and other Sales Taxes
  • Checking Lender compliance with Covenants for approvals/NOC
Portfolio Evaluation
  • Periodic review of the Fund Portfolio’s investments
  • Periodic examination of the securities in the Fund Portfolio
  • calculating the following ratios on a regular basis after valuation
  • DSR: Debt Service Ratio
  • SCR stands for Security Cover Ratio.
Special notes/remarks for factors that have a direct impact on the subject property’s market value.