Cost and value

One cut-off, or it is not a reconciliation

Value from the last certificate and cost from the ledger at month end are not two sides of the same project. They are two different projects being compared with each other.

Variations move from settlement value to agreed value
Provisional sums adjusted against what the work actually cost
Retention release shown explicitly on the value side

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Final account

Statement to settlement

Original contract sum£1,352,000

Variations, approved+£46,000

Provisional sums adjusted(£12,000)

Adjusted contract sum£1,386,000

Less certified to date, gross(£1,196,000)

Add retention release+£29,900

Final balance due, excl VAT£219,900

Variations carried at settlement value in the CVR become agreed figures in the final account, so the margin you reported month by month is tested against the adjusted contract sum rather than quietly abandoned.

Where the margin is finally proven

Every period of a CVR is a forecast of the same thing: the margin at the end.

The final account is where the forecast is settled and the estimating stops. Variations carried at settlement value in the CVR become agreed figures in the final account, so the margin you reported month by month is tested against the adjusted contract sum rather than quietly abandoned.

Cost and value

The date governs both sides

A CVR is a matter of judgement dressed as arithmetic, and the judgement that matters most is the cut-off.

One cut-off date per period, applied to value and cost
Certified value pulled from the certificates already issued
Work done but not certified and variations at settlement value, entered separately

Cost and value

Period to 30 Nov 26

Value

£1,284,000

Cost

£1,171,000

Margin

8.8%

Certified value£1,196,000

Done, not certified£42,000

Variations at settlement value£46,000

Value to the cut-off£1,284,000

Variations are carried at what you expect to settle at, not at what was applied for. The difference between those two is where optimism enters a margin.

Cost and value

Accruals and provisions, prompted

Cost incurred but not yet invoiced has to be accrued, or the cost side is understated and every job looks profitable until the post arrives.

Cost invoiced, accruals and provisions entered separately
Warning where accruals or provisions are nil
Movement against the previous period, with a prompt to explain it

Cost and value

Movement

Margin, period to 31 Oct£121,400

Margin, period to 30 Nov£113,000

Movement(£8,400)

Explanation recordedYes

A movement nobody can explain is the one that turns into a write-down later. The explanation is the report; the numbers are the evidence for it.

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Reports

The client sees a cost report, not your margin

A CVR is an internal document.

Margin and cost stay internal, hidden from client guest links
Anticipated final cost against approved budget for the client
Variance stated as a figure, not signalled only by colour

Reports

Cost report to client

Approved budget

£1,400,000

Anticipated

£1,388,000

Variance

+£12,000

Certified to date£1,196,000

Committed, not certified£168,000

Risk allowance carried£24,000

Anticipated final cost£1,388,000

The same figures drive a cost report that faces the client: anticipated final cost against budget, with no reference to cost or margin. One set of numbers, two audiences, kept apart on purpose.

Risk register

The provisions in a CVR come from somewhere

Carrying no provisions assumes nothing will go wrong, which is why QScope warns on a nil period.

Each risk carries a cost, a probability and an owner
Allowance calculated as probability times cost, per risk and in total
Total allowance feeds the CVR provision

Risk register

Commercial risk and provision

RiskProb.Allowance

Ground conditions below slab30 %£11,400

Late structural steel delivery45 %£6,300

Client changes to M&E layout20 %£6,300

Asbestos in the annexe10 %Closed

Total allowance into the CVR£24,000

The risk register quantifies each commercial risk as probability times cost, and the total feeds the provision in the CVR, so the figure protecting your margin can be defended line by line.

Who it is for

One record, four reports that must agree

You are applying

You report cost against money secured

You report cost against the sum you have actually secured, and the difference between the two is the conversation with your own board.

Applying for payment

the same measurement

You are certifying

You report on figures you certified

You report to the client on a job you certify, and the report has to reconcile with the certificates you signed.

Certifying payment

You are doing both

Your record is the only report there is

You are the report: what you have applied for, what has been certified and what is still to fund, pulled from your own record.

Doing both yourself

You are reporting

You turn the record into a drawdown

You turn the project record into a drawdown recommendation, and the figures have to reconcile before the lender releases a pound.

Recommending a drawdown

The client, the architect and the tenderer are not on this list. They are the people you let in on a link: they see the one document you sent them, answer it, and that answer is written into the record. No account, no licence, no charge, on every plan.

FAQs

The questions this page raises most often, answered without a sales pitch at the end.

No. The cost side is entered by hand and stays that way. The program has no access to your accounts, and pretending it did would be the worst possible choice in a report about margin.

Contractors and subcontractors reporting internally. A client-side quantity surveyor reports the anticipated final cost instead, which is a different document with a different audience.

One per valuation cycle is usual, so the cut-off lines up with something that already exists rather than a date chosen for the report.

Because carrying none assumes nothing will go wrong, and that assumption is almost never deliberate. If it is deliberate, the warning costs you nothing.

Yes. A CVR is largely the same everywhere: value against cost to one cut-off. QScope carries the currency for the market, and the tax on the final balance varies by jurisdiction, VAT, GST or SST, which sits outside the margin rather than in it. Rates are starting points to verify locally.

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All 174 pieces

Keep reading

The three parts this page leans on

Cash flow Receipts against payments on the real payment dates, UK or FIDIC, with the peak funding requirement it exists to produce, in the currency for the market. See how it works Reports Print the reports a quantity surveyor actually sends: anticipated final cost against budget, retention notice, payment schedule and variation register. See how it works What a CVR is really for Not at the end, if you do it right. A cost value reconciliation compares what the job has earned with what it has cost, to the same date, once a month. It is one honest table, and the first one you build will probably ruin an evening. Build it anyway. See how it works