unit 4. site cost control systems - trent global...• wdd and swdd documents can take numerous...

School of the Built Environment

Unit 4. Site Cost Control Systems

Learning outcomes

• Typical cost management systems

• How to deal with changes to the construction requirements

• The difference between cost and value and how they compare

• The key documentation necessary to control costs


Site Cost Control Systems

Cost Management and Control systems

• Project price forecasting to establish a reliable budget then cost planning and controlling the emergent design costs is an essential project management function.

• the management and control of costs in the project production phase & the identification of any variances from planned levels & its eventual cost performance is often the primary criteria by which project success or failure is evaluated.




• Kerzner (p598) defines cost control as,

“… not only monitoring of costs and recording perhaps massive quantities of data, but also analysing the data in order to take corrective action before it is too late.”




• The process is essentially similar to the mechanics of construction project planning and control

• The work is broken down into work packages that reflect the previously established WBS, so that they can be individually estimated and priced.

• This sets up a budget plan where individual packages have target costs and are identified by some kind of account code system.

• Actual costs charged against each package can then be

related to budgeted costs as part of the monitoring process.




• The main difference between this approach to cost control and project (programme) control is that there is no direct time measurement involved.

• Time does affect the performance of the cost control system as it regulates the rate of expenditure and therefore the characteristics of both the expenditure and projected cash flow curves.

• Project management approaches to pricing, estimating and cost control are based on the theory of the cost management and control system.

• All estimating and cost control systems can be founded on this basic approach.




• The cost management and control system (CMCS) can be

represented as follows

Planning

Work

authorisation and

release

Cost data

collection and

reporting

Cost accounting Customer &

management

reporting

Planning

Cycle

Operating Cycle




• Most researchers represent the CMCS as a two-cycle process. The cycles are Planning (cycle 1), and operating (cycle 2).

• Within these two cycles there are five phases.

• These are planning (phase 1), work authorisation and release (phase 2), cost data collection and reporting (phase 3), cost accounting (phase 4) and customer and management reporting (phase 5).

• These five phases, operating within the two cycles, provide the framework for the operation of the CMCS. The planning cycle also incorporates project design cost control in its cycle



The CMCS Planning cycle

Phase 1: Planning & building a project price forecast & budget

• The planning phase consists of breaking down the project into separately controllable packages and then calculating a cost target (or budget) limit for each one.

• This builds on the WBS that was originally included as part of the strategic PMP documentation.

• The development of work packages for subsequent tendering can also be obtained through any Bills of Quantities (BQs) that

have been subsequently prepared for the project.





• Such BQs would have been prepared on the basis of a relevant standard method of measurement (SMM).

• In the UK SMM7 is the current method of measurement of building works.

• Once the WBS and/or the BQ has been identified, the next stage is to set up the project price forecast and the project budget





• The generation of a reliable initial project budget figure is an essential first step towards setting up a cost control system.

• For many projects this performance measure is central to the determination of client satisfaction.

• Normally the responsibility for the generation of the initial project price forecast lies with the cost consultant.

• The PM needs to be familiar with the processes by which the initial project budget figure is generated in order to ensure that

the initial budget is achievable





• The process involves both the formulation and communication of advice that will influence the client to make a decision on whether to progress or not with the project itself.

• The formulation phase requires the professional to select an appropriate cost model, which is then manipulated and a judgement is made on the output of the model in terms of the reliability or otherwise of its product.

• The communication phase involves the practitioner shaping and forming an appropriate message for the client so as to ensure that the client understands the information provided and is capable of assessing its impact on the proposed project’s development.





• The PM needs to be aware of the process by which the price advice is formulated.

• At the core of the formulation process is the selection and use of an appropriate cost model. In theory there are over eighty cost models available for use.

• There are major forms of model available and in use, namely the traditional, manual deterministic models and the more recent, computerised, stochastic models. • The traditional models typically produce single point figures and

are incapable of coping with the risk, uncertainty and lack of data. • The newer models that have been developed to take better

account of project risks and uncertainty





The project budget

• The budget plan is simply a statement of how much money is available to each section of the WBS.

• The basis of the budget plan is again the priced BQ. The basic WBS can be set up at pre-tender stage as soon as production drawings are available.

• The WBS can be primed with estimated section costs and total based on whatever form of pre-tender cost check is carried out.





The project budget

• A formal budget plan cannot be established until a priced BQ has been received from a contractor and an agreed tender total accepted.

• Commercially available computerised software packages are now available to assist in this process

• The use of professional judgement is still the main way in which construction professionals establish an initial construction project price forecast and budget.



The MCCS Operating cycle

• Phase 2: Work authorisation and release

• Phase 3: Cost data collection and reporting

• Phase 4: Cost accounting.

• Phase 5: Customer and management reporting




Phase 2: Work authorisation and release

• In order to be able to control costs, there must be some form of controlled release of work.

• This could be done through the formal issue of a contract, or (for example in the case of variation orders) as some kind of work description document (WDD).

• On larger or more complex projects, a second level of control can be exercised by the use of a Subdivided Works Description Document (SWDD).

• This sets out specific details such as individuals involved, specifications, requirements for contractual compliance etc.




• A example would be a project works order (PWO). The PWO describes the work, standards, and the cost centre to be charged. This is done through some system of cost account codes (CAC). The CAC system is usually based on the project WBS.

1.0

Building

1.1

Mechanical

1.2

Electrical

1.2.1

Power

1.2.2

Wiring

1.2.2.1

Conduit

1.2.2.2

Cable




• Cost account codes are essential, in that they identify the cost centres that are to be charged for the work that is described on the WDD or SWDD.

• Cost monitoring and control can only work if the correct cost centres are identified both on the WDD or SWDD and in any the invoicing and recharging system, through the CAC system

• WDD and SWDD documents can take numerous forms. More and more they are being developed as part of overall project communication and configuration management software packages.

• Parts of the component information for the WDD and SWDD are imported directly from elsewhere, within the same software or from other operating systems.

• For example, start and finish dates for individual activities could be imported directly from the project planning and control application.




• Typical subdivided works description document (SWDD) screen

Work Authorisation Form

WBS WP No: 1-27-44

Project Works Order: 12334

Date of original release: 01 September 2005

Revision Number: 03

Dated: 20 November 2005

Configuration ref: 22.112.445

Description

Price code

Cost

Centres

Hours Start Complete

A2001 1200.1 40 20.11.05 27.11.05

A2001 1200.2 80 27.11.05 12.12.05

A2004 1200.3 80 28.11.05 13.12.05

A2007 1200.4 160 28.11.05 28.12.05

A2007 1200.0 160 30.11.05 01.01.06

Authorisation code:

Password:

Distribution scope: D1233, D3344, D7227

1.7.1.1.1.1.1.1.1

•Start and finish data could be imported directly from the schedule software and price code data and cost centre data could be imported directly from the project •Cost account codes usually work through predetermined and fixed budgets. To work, these have to be fixed and can only be increased through some kind of formalised control system such as cost account change notices (CACN).



Phase 3: Cost data collection and reporting • The APM, PMI, ISO10006 and BS6079 all require the use of

earned value analysis (EVA) for project cost data collection and reporting.

• EVA is simply a way of comparing actual with target figures for performance and cost.

• EVA uses variance analysis as the basis for its calculations.

• Variance analysis is centred on two variances, cost variance and schedule variance




Phase 3: Cost data collection and reporting

Cost variance

• For both budgeted and actual costs, the cost variance is the difference between the budgeted cost of the works and the actual cost with the value is taken in terms of the works actually completed or performed.

• Cost variance = budgeted cost of work performed – actual cost of work performed

• CV = BCWP – ACWP




Phase 3: Cost data collection and reporting

Schedule variance

• The schedule variance is the difference between budgeted cost for the works completed and performed and the budgeted cost of the works scheduled.

• Schedule variance = budgeted cost of works performed – budgeted cost of works scheduled

• SV = BCWP – BCWS




Phase 4: Cost accounting.

• Cost data is collected via measurements of work done and materials stored on the site and interim monthly invoices from sub contractor and suppliers for work and materials contractor to form an interim valuation.

• This valuation (data) is presented to the client via the clients consultants for payment.

• The same data is also presented internally to the contractors own accounting department as a means of controlling the value of the payments to the contractors own supply chain.




Phase 4: Cost accounting.

• In addition the cost data from all current projects is brought together by the contractor to evaluate its business position on a regular basis.

• Cost data from all individual projects will be transformed to a common date and re-allocated to conform with a standard accounting approach

• This standard approach is likely to be the standard approach to payments (SAP Nr 9) currently used by accountants to evaluate

a business’ financial standing.




Phase 5: Customer and management reporting

• Reporting revolves around the generation of the cost account variance analysis report for senior management.

• The reports (normally monthly) are known as cost account variance analysis reports or CAVARs

• A report would normally show the variance performance of the project as a whole but could be broken-down to finer levels of detail according to the WBS that was used to formulate the budget.

• The CAVAR system would generally show the overall performance characteristics for the whole project as its initial level.





• It would then go on to produce CV and SV figures for all the work packages right through the project.

• Typically all the component work packages in the entire project are costed and stored as part of a computerised information system.

• As actual data is fed into the system at each valuation, this information can be used to generate variance analysis data right down to level 6 of the WBS.



Phase 5: Customer and management reporting CAVAR

Cost Account Code:

WBS code:

Reporting level:

Cost Performance Data

ACWP BCWP BCWS CV SV EAC VAR

Month

Project

Reasons for Variance

Proposed corrective action

Tracking

Originator: PM authorisation: Change control authorisation:




• The CAVAR report would summarise performance for the project as a whole and for each layer of component WBS elements.

• It would also specifically identify WBS elements where cost or time overruns are occurring.

• Negative variances would be traced back until an origin point can be identified.

• Appropriate investigations would then be carried out to isolate the precise reasons for the bad performance and appropriate corrective action would be recommended by the project manager as part of the CAVAR report.



Change management

Configuration management

• Configuration management or configuration change control is one of the most important functions employed by a project manager.

• Configuration management is really concerned with change.

• As projects evolve and develop, there will be a functional relationship between the project phase and the cost required in order to make given changes. So, generally, as project development increase, the cost of making changes increases.



Change management


• Configuration management is a control technique for formal review and approval of change on a project. If properly executed, a good configuration management system provides a comprehensive change control and management system.

• Configuration Management also acts as a focus for change proposal and consideration and as an interface for client and

contractor responses and communications.



Change management


• Configuration management on larger projects will usually be carried out by some kind of configuration or change control committee.

• This body will be responsible for considering change requests in the context of the project in order to allow a decision to be made as to whether or not to proceed with the change.

• Generally, the decision to proceed may not be based solely on the cost of development and manufacturing. It may be necessary to consider the operational costs and maintenance costs during the design stage.



Change management


• On larger projects, the usual tools used in making these appraisals are cost benefit analysis and cost effectiveness analyses.

• These approaches are supported by a range of cost models which are used to estimate the functional efficiency, risk and life cycle cost of each alternative.

• There are two main approaches to design cost limitations, namely the design to cost approach and the cost effectiveness approach.

• Other approaches include value management and design cost control.



Change management

Configuration management baselines

• Baselines are central to configuration management. • A baseline is an appraisal of the requirements of a project at

one particular moment. • It is developed and recorded as a record document. • It then acts as a standard against which actual performance

can be measured as the project progresses. • Most strategic / generic project master / execution plans

establish a baseline as a standard record document. • Configuration management is centred on three main baselines

for the measurement of performance, namely, (i) The functional (programme requirements) baseline (ii) Allocated (design requirements) baseline (iii) The product (product configuration) baseline



Change management


(i) The functional (programme requirements) baseline

• In configuration management, a baseline is established at each phase of the project’s lifecycle and this baseline has well defined procedures for handling deviations.

• The functional baseline is the first baseline that is established for the project. It is analogous to the first stages of the generic project plan baseline as recommended by BS6079.

• It is prepared in the first phase of the project lifecycle, i.e. the

conceptual phase.



Change management


(i) The functional (programme requirements) baseline

• The functional baseline contains technical data regarding the functional characteristics of the project for example demonstration tests, interface characteristics and integration characteristics.

• It sets out the basic characteristics of the project and acts as the foundation for the subsequent development of the configuration management system.

• Approval of the functional baseline is often subject to a preliminary design review (PDR). This is one of the first gateways in the design lifecycle.



Change management


(ii) Allocated (design requirements) baseline

• The second baseline is the allocated baseline.

• This document contains baseline design parameters derived from the system design. This would be developed from the functional baseline, as more design information becomes available.

• Approval of the allocated baseline is subject to a critical design review (CDR).



Change management


(iii)The product (product configuration) baseline

• The third and last baseline is the product baseline.

• It includes information on the system as built, including details of acceptance and handover testing.

• Approval of the product baseline is subject to a physical configuration audit (PCA).

• Generally, transition from baseline to baseline takes place via a process of design reviews.



Change management

Configuration change control

• Configuration change control involves the development of procedures that govern three steps: – Preparation of a change request – Evaluation of a change request. – Management of the implementation of approved changes

• Under the configuration change control (CCC) process, a formal change request is prepared and submitted.



Change management

Configuration change control

• The change notice might specify the reason for the modification and forewarns management of increases in cost, schedule and risk, as well as changes in contractual arrangements, quality and system performance.

• A well functioning change control system assures tight control of the technological aspects of the maintenance project.

• It also provides tight configuration records for the smooth, co-ordinated implementation of changes and effective logistics support during the life cycle of the system.


Change management

Configuration status accounting

• Configuration status accounting (CSA) provides for the updated recording of current configuration identification (including all baselines and configuration items) and historical baselines and approved changes.

• The CSA also acts as a register of pending change and reports on status of implementation of approved changes.

• It records of how far approved changes have got through the system, and their current status.

• Configuration management provides the baselines and a record of incorporated and outstanding changes.

• Quality assurance first checks the configuration documentation to evaluate requirements, and then verifies that the system conforms to the approved configuration.


Change management

Task Owner

Variation Order Process

Processes

Project Manager

Design Team &

Project Manager

Project Manager

Falkirk Council

Main Contractor/

Design Team

Project Manager

Variation Request Received

Assess Design and Programme

Impact

Inform Falkirk Council of Variaton

Impact - Cost/Programme

Instruction to Proceed or Withdraw

Variation

Issues PMI to Main Contractor and

Informs Design Team to proceed

preparation of Construction Drawings

(if necessary)

Incorporates Variation Order &

Provides Confirmation Report of

Impact

Revise Design & Construction

Programmes if Required & re-Issue

A&L King/Ogilvie

ConstructionAssess Cost & Programme Impact

Project Manager

Instruction to Withdraw Variation

No Further Action Required


Change management

PROJECT CHANGE REQUEST

PROJECT NAME

Title: PCR No :

Originator of Change: Date:

Type of Change: Client Requirement External Body

Design Proposal Value Engineering

Other

Proposed Change:

Reason for Change:

Date decision required by:

Date information required by:

Distribution:

Anticipated Cost Implications: Programme Implications: TTPM

£ : estimate .............. Days : TTPM estimate

£ : Agreed with Contractor .............. Days : Agreed with Contractor

..............: Initials ............: Initials

Design Team Comments (Re: performance / quality / health & safety):

....................:

Initials / Company

Submitted by TTPM Date : ........................ Initials:.....................

Approved / Not Approved by (Client)

Signed:..............................................

Date:....................

Distribution:



Cost Value Reconciliations

• The term ‘cost’ refers to the estimated and total expenditure incurred by the contractor on a specific project, and includes all overheads associated with the project.

• The term ‘value’ refers to all costs as above plus the margin of profit.

• ‘Value’ is the figure paid by the client to the contractor following interim and final certification.




• Before the project begins, there will be an analysis from the tender of the project in terms of:

• Net cost of production (NCP)

• Overheads

• Profit.

• During the course of the project, income and expenditure are analysed monthly, and this assessment of cost and value is compared with the initial analysis and anticipated performance.

• This comparison is often termed the cost value reconciliation; an equally appropriate term for it would be a profit and loss account.




• After the contractor’s quantity surveyor has agreed an interim valuation with the consultant quantity surveyor, an internal assessment of all works completed on site is produced for inclusion in the cost value reconciliation.

• This is done in consultation with other departments including the cost and accounts department and the site management team.

• The reconciliation is discussed at a management meeting so that any financial problems may be considered and appropriate action taken.

• Problems which have arisen should be dealt with as quickly as possible and this is why the reconciliation should be produced as

soon as possible after the interim valuation.



Cost Value Reconciliations - Forecast Breakdown

GATEWAY CONSTRUCTION PLC

Management Accounts Date

Month Year to date Total project

Actual Budget Forecast Actual Budget Forecast Actual Budget Forecast

Tendered contracts

Negotiated contracts

Previous year updates

Total

Net cost of production

Tendered contracts



Total

Gross Profit

Tendered contracts



Total

Overheads

Tendered contracts



Total

Net operating profit




• Information arising from the reconciliation should be fed back to the estimating department to enable them to take note of any discrepancies or difficulties when preparing future estimates.

• For accurate comparison to be made, both cost and value should be assessed as at the same date.

• If the costing date is different from the date of the interim valuation, appropriate adjustments must be made.

• In the UK, the Institute of Chartered Accountants produced guidelines called the ‘Statement of Standard Accounting Practice No.9’, (SSAP9). The cost / value reconciliation is produced for the purpose of management accounting and in the UK the SSAP9 guidelines should also be followed.



Production of Cost/Value data and the CVR

• The first part of any CVR should include the dates of the interim valuation and CVR.

• The CVR should contain details of contract dates, the original tender and projected final account sums.

• It should also provide the date up to which the cost has been assessed, allowing for a check against the valuation date.

• A copy of the architect’s interim valuation certificate should be kept on file in the contractor’s quantity surveyor’s office.

• These should relate to the date of the CVR given at the top of the schedule.

• Where dates of interim valuation certificate and the CVR differ, an explanation should be provided to explain the difference.



Production of Cost/Value data and the CVR

• The analysis of value for a CVR can be facilitated by an analysis of all Bill items claimed broken down into headings of:-

• labour

• sub-contractors,

• plant,

• materials,

• overheads and profit.

• This analysis can be used as part of the process of building up a figure to represent the gross value of executed work to date.

• The cost and value comparison contained in CVR must assemble all details relating to both the costs and value in order to obtain a meaningful comparison.



CVR – Gross Value

• The gross value side of the equation is the most easily assimilated

• The build up of the gross value for CVR purposes is not dissimilar from the way in which a client’s financial report is compiled

• Below is a list of typical items included in such a report

• The contract sum

• Gross value of work certified to date,

• Gross value of work executed to date

• PC and Provisional Sums

• Variations

• Claims.

• Fluctuations

• Retention monies held

• Other deductions and Adjustments



CVR – Gross Value

• An of the gross value of executed work, will include a breakdown of the value, between the main contractor’s work and that of sub-contractors’ works priced in accordance with their quotations.

• The difference between the two indicates the financial effectiveness of the sub-contractor’s work.

• The CVR should detail the anticipated final account sum and the gross value of work executed to date, also it should make use of the net gross value, i.e. the value of works completed within the most recent valuation period.

• This is used as a means of calculating the value of fluctuations for the period and as a means of examining recent changes in profit or loss making activities.



CVR – Costs

• The data relating to costs will be assembled from a number of sources, each requiring complete and detailed records.

Labour

• Cost analysis of Bill rates will yield much of the information required in terms of measured work executed on site.

• If bonuses are paid to operatives, these and all other on-costs should be included

• this info. may be supplied by the cost and bonus department.

• Where there has been a need to accelerate the works, allowance in the CVR labour cost analysis should include for non-productive overtime.



CVR – Costs

Plant

• The assessment of these costs will relate to all mechanical and non-mechanical plant.

• The contractor may hire all plant required for the project in which case it will be a matter of apportioning plant costs throughout the work items on the basis of all known hire charges to date.

• Plant returns are an obvious source of information.

• Where plant is owned by the contractor, assessments should be made in respect of the operating costs, repairs and maintenance, depreciation and residual values

• Allied to plant costs are haulage and transport charges for transporting plant, materials and personnel.



CVR – Costs

Materials

• The analysis and CVR should include the invoiced costs of all materials delivered to site.

• Where materials have been delivered but not invoiced, provision should be made in the costs if this is practicable (Accruing)

• Costs should also be included of all materials paid for in advance, as well delivery and handling charges.

• For accuracy, note should also be taken of discounts offered by suppliers and any other charges or refunds to the contractor.

• Notices of goods received on site are an obvious source of information.



CVR – Costs

Sub-contractors

• The vast majority of all construction work in the UK is undertaken by sub-contractor labour.

• When producing a CVR, the contractor’s quantity surveyor should take care to ensure that all known costs in respect of sub-contractors, whether nominated or domestic are included.

• The most common way of doing this is to produce a detailed schedule of the contractor’s cost liabilities in respect of sub-contractors.

• To do this, details of the order value is placed against each sub-contractor.



CVR – Costs

Sub-contractors

• The value of work invoiced by and paid to the sub-contractor is included, together with an evaluation of all executed work not yet invoiced, based on the contractor’s quantity surveyor’s appraisal of work completed in their assessment of the gross value discussed above.

• In the assessment of sub-contract liabilities, attention must be paid to any variations to the sub-contractors work as detailed in the original order, any actual and potential claims paid or outstanding, and in exceptional circumstances, additional payments for acceleration, etc.

• Sub-contractors’ liabilities data would be taken from the individual sub-contractor’s files and inserted in a SLD return.



CVR – Costs – SLD

GATEWAY CONSTRUCTION plc

Analysis of Sub-Contractor Liabilities and Profit

Contract: Public Library Valuation No. 2 Job No. SC/03/301 Period ending: 28/05/03

Client Sub-Contractor

Deduct Discount

Sub-contract Order

Value Measured

Work Materials on site

Total Value Measured Work

Materials on site

Sub Total

% Disct all.

Total Liability

Profit

Concrete frame 88,000.00 102,115.21 0 102,115.21 100,000.00 0 100,000.00 2.5 2,500.00 97,500.00 4,615.21

Lift installation 108,000.00 102,000.01 0 102,000.01 94,200.00 0 94,200.00 2.5 2,355.00 91,845.00 10,156.01

M & E 510,000.00 327,000.05 0 327,000.05 309,779.36 0 309,779.36 3.5 10,842.28 298,937.08 28,062.97

Total 531,115.27 0 531,115.27 503,979.36 0 503,979.36 - 15,697.28 488,282.08 42,834.19

Sheet 1 of 1



CVR – Costs

Additional Costs

• Allowance should be made in the CVR for additional costs due to labour and materials shortages, especially where labour has been brought in from further afield, or where in order to overcome shortages, materials have been imported from overseas.

Overheads

• Assessment of overheads should take into account all head office as well as site overheads related to the project; residual values are also an aspect for consideration.



CVR – Costs

Reserves and Contingencies

• Having completed the general assessment of gross and net values, the resulting profit margin appears to be higher than the original figure shown in the tender analysis.

• In these circumstances, some of the ‘surplus’ profit may be held back in the knowledge that less profitable, and even unprofitable activities may lie ahead.

• To do this a contingency fund may be created, or cost reserves inserted against some of the heads of cost within the CVR.

• To be able to make sound judgements the quantity surveyor should confer with the site management team to gain an understanding of any potential difficulties which may lie ahead.



CVR

Budget Forecast

Sub-contractor

liabilities

Analysis of

measd. Bill rates

Cost / Value Reconciliation

Risk register

Plant returns

Materials received

(site office)

Overheads

(Accounts)

Labour costs

(C+B Dept)

Work certified

for payment

Variations

Account

Agreed claims



CVR

GATEWAY CONSTRUCTION plc

COST / VALUE RECONCILIATION

Project Title: St Mungo’s HS Job No.: SC/03/200 Cost / Value Reconciliation No. 8 Date: 28/06/08

Interim Valuation No. 14 Date: 28/05/08 Gross Value of work certified £ 14,245,650.88

Contract Sum £ 27,001,002.00 Period ending: 25/05/03

Projected Final A/c £ 7,523,920.08 Contract duration (weeks): 86 Contract time elapsed (weeks): 36

Completed by: P. I. Marks

Project surveyor

Details

Gross value £

Cost £

Profit / (Loss)

£ Work executed to date 14,245,650.88

Adj. PC & Provisional Sums 111,665.44

Variations 361,251.65

Agreed Claims 50,000.99

Fluctuations nil

Total Gross Value 14,768,568.96

Less: sundries 40,357.96

Total Net Value £ 14,728,211.00

Analysis of Value & Cost:

Labour 2,400,000.10 2,301,299.17 98,700.93

Sub-contractors 6,400,000.67 6,319,388.84 80,611.83

Plant 1,307,250.17 1,312,215.71 -4,965.54

Materials 3,209,308.00 3,412,085.69 -202,777.69

Overheads 1,251,001.02 1,033,445.00 217,556.02

Profit 401,010.00 401,010.00

Total Gross Value £ 14,968,568.96 14,378,434.41 590,134.55

Less: Retention & sundries -40,357.96 -40,357.96

Totals £ 14,928,211.00 14,378,434.41 549,776.59

Less: Costs 14,378,434.41

Total Net Profit £ 549,776.59



Site Cost Control documentation • In order to produce the figures contained in the CVR it is

necessary to prepare; record and maintain accurate records and information on site.

• The information has to be complete and encompass all the cost centres relative to the site works and management if they are to reflect the total cost to date on the construction element of the project.

• Records include the following • Weekly Plant and Materials returns • Monthly Labour and Staff costs • Monthly Valuation of works done



Site Cost Control documentation

Plant and Materials returns

• Plant and Materials returns will normally be produced weekly and these consist of recording all items of site plant use on site that week and all the Materials delivered on site the previous week.

• The Plant and Materials returns are usually in a spreadsheet format and each row covers information the items arrival date, delivery number, order number, description, unit cost and total cost.

• In the case of Plant it will also include any additional costs such as bonus or maintenance allowance that have been incurred in the week and it will also include the date (and/or time) when it left site together with any on/off charges.




Plant and Materials returns

• The preparation of these records relies on the recovery of every delivery ticket which provides much of the required information

• However, conditions on site, or poor management structures often lead to delivery tickets going missing and this will lead to under-recording of delivery costs.

• This serious defect can be overcome by “Accruing”.

• Whereby the management team review the information prepared by the clerk and accrue an amount for the missing information

• The management team should interrogate every row on both the plant and materials returns to ensure that his estimated costs accurately reflect the costs to date




Labour and Staff costs

• Labour and staff costs are usually provided to the project’s site management team by the local head office.

• These detail the wages or salary costs paid out by the company in that month, together with other employment costs for every individual involved in the project.

• The key for accurate recordkeeping and payment in labour and staff cost is the recording of actual attendance and control of any bonuses paid to labour or staff.

• All bonus calculations must reflect performance in excess of what the tendered costs predict.




Valuation of works done

• Interim valuations are submitted in the timescales laid down by the Client, normally these are monthly at the end of each month

• Interim payments are how the contractor receives cash flow throughout a project in order that he does not have to fund the cost of project before receiving any income from the Client

• In order to justify interim payments, the contractor produces an interim valuation where he identifies to the client the works he has completed and, based on his tender breakdown (BQs, or Contract Sum Analysis), either as a quantity or a percentage, a value against each activity that has been undertaken.

• By deducting the total agreed in the previous monthly valuation, the current months valuation for interim certification is arrived at.

unit 4. site cost control systems - trent global...• wdd and swdd documents can take numerous...

Documents