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Where could you find guidance on pre-construction cost reporting?

New Rules of Measurement


What duties should a QS provide a client in regards to post-contract cost control?

• report all known construction costs
• report all anticipated construction costs
• report on required risk allowances for construction costs
• provide reports on a regular and frequent basis


What is the purpose of cost reporting?

To inform the client of the likely outturn cost of a construction project

The forecast outturn costs may be expressed as a variance against a budget amount, or expressed in absolute terms.


What is good project financial control?

A proactive approach to managing the financials of a project.
• Always accurately track costs and changes to costs
• Communicate the changes effectively and as and when required
• Keep a rolling final account
• Good cost reports documents to keep the client informed
• Good relationship with contractor


How do you ensure effective control of costs on a project?

• Proactive risk and contingency management
• Implementing a robust change control process
• Management of provisional sums within budget
• Regular cost reporting which is forward looking
• Rolling final account


What is the role of the QS in terms of controlling costs?

- Actively manage project costs
- Report to project team on costs, cost changes and potential cost changes (EWNs)
- Both pre and post-contract


What financial control documents do you produce at pre-contract stages?

• Cost estimates/ feasibility estimates
• Cost plans
• Cost Reconciliation (detailing the reasons for cost changes between cost plans)
• Value engineering exercises
• Early warning trackers
• Benchmarking exercises


What financial control documents do you produce at post-contract stages?

- Cost Reports
- Valuation assessments
- Early warning / risk trackers
- Change control trackers


What is a cost report?

A document produced periodically that sets out the financial position of a project at that current point. A cost report will ultimately describe the starting position (the contract sum), the current position and the estimated final account value.


What is the purpose of a cost report?

• Inform client of the likely out-turn cost of the
construction project
• Give Client an understanding of any savings or
additional monies required
• Report contract progress
• Basis of final account


What does a cost report record?

- Contract sum
- Current position & changes to contract
- Anticipated final account
- Project progress
- Expenditure of risk allowances


What types of cost report can you get?

- Construction cost report

- Project cost report

- Programme cost report

- Detailed cost report


What is a construction cost report?

Captures historic and forecast costs incurred under a construction contract


What is a project cost report?

Captures historic and forecast costs across a construction project. May include construction costs, professional fees, statutory fees, third party costs, Client direct costs, land costs, agency costs, finance costs, legal fees


What is a programme cost report?

Captures historic and forecast costs across a programme of construction works. May include (Programme management office costs, project costs)


What is a detailed cost report?

o Elemental Cost Report - reporting on an elemental level, can assist in VM/VE as budgets established elementally

o Building cost report - report for individual buildings across a project of multiple buildings

o Budget holder cost report - reports prepared for
the elements of the construction works under the control of individual budget holders (e.g. designers)

o Stakeholder cost report - cost reports prepared for
individual stakeholders in projects with multiple


What are the components of a cost report?

• Executive summary
• Variations (instructions and agreed)
• Variations (instructions but not agreed)
• Anticipated instructions
• Early Warnings
• Unapproved changes
• Cashflow
• Contingency details
• Expenditure against provisional sums


How often should cost reports be issued?

Usually on a monthly basis but this should be agreed with the Client on their requirements


If a client says they aren’t interested in cost reports, what would you do?

- Speak with client, reiterate benefits

- Propose an alternative such as a one pager cost report

- If still no, I would still produce a cost report on a monthly basis as part of my due diligence and to update the client as to the project financials / progress


If there is no change during the reporting period, would you still need to produce a cost report?

- Yes, good practice to always produce an up to date cost report

- Might be some new early warnings which have a potential cost implication

- Will need to update cash flow with latest interim valuation


How would you deal with a situation where the cost report indicates the budget will be exceeded?

- Inform the client and outline reasons why

- Set up meeting to discuss with team in greater detail to plan a way to deal with the overspend

- Before meeting think of initial ideas to deal with the overspend (areas for value engineering)


How did you approach completing your cost report?

Discussed Client’s internal reporting procedures to ensure cost report met their requirements

Before issuing cost report, it was presented and discussed with the Client


What should a Cost Report generally exclude?

• VAT (Construction Cost Report)
• Capital Allowances
• Direct Works
• Works undertaken by statutory undertakers (Construction Cost Report)
• Planning costs


What can the Client do if the cost report is showing the project out-turn cost over budget?

• Omit works
• Reduce scale of works
• Reduce specification of works
• Increase budget


How might you tailor a cost report?

- Understand client's requirements
- Expand on certain sections or simplify others
- One pager


How would you report on costs for different procurement routes?

For a traditional or D&B job you would report on the costs with one main contractor whereas CM you would need to report on the various trade packages.


Why not use interim valuations to review the current financial position?

- Valuation only shows expenditure to date

- Cost report shows current position and anticipated final account

- Valuations wont take in to account all the costs for which the client is currently liable

- Valuations do not factor in anticipated changes / EWNs


What are the typical headings for lump sum contracts?

• contract sum
• adjustment of variable costs
• adjustment of variations
• adjustment of fluctuations
• claims for loss and/or expense; and
• adjustment of risk allowances.


What are the typical headings for remeasurable contracts?

• contract sum
• adjustment of remeasurable work
• adjustment of variable costs
• adjustment of variations
• adjustment of fluctuations
• claims for loss and/or expense; and
• adjustment of risk allowances.


What are the typical headings for reimbursable contracts?

• contract sum/target cost
• adjustment of reimbursable costs incurred
• forecast of reimbursable costs to be incurred; and
• adjustment of risk allowances.