cost valuation reconciliation. when usually commences after the external valuation time dependent...

Cost valuation reconciliation

When

• Usually commences after the external valuation

• Time dependent upon the complexity and size of project

• Usually takes two weeks to complete• Discussed at Monthly CVR meeting

© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

2

Fundamental principle

• Prudence• Match expenditure with income• Uses the application for payment and the

architects certificate to substantiate the valuation/Net sales value of the works


3

Documentation used

• External valuation– Identification of:• Overmeasure• Undermeasure• Variations in dispute• Claims in dispute• Materials on site• Undercertification


4

Information flows


5

Documentation (contd.)

• Overmeasure schedule• Undermeasure schedule• Subcontractor liability build-up• Architects/Engineers certificates• Contra charge invoices


6

Definitions• Overmeasure

– Claimed-Unpaid– Claimed-Paid

• Definition-“Application for monies in advance of their eligibility”• Undermeasure• Definition-“Work completed that costs have been incurred for but

haven’t been included in the application for payment”– Measured works– Variations

• Work in Progress• Definition-“Work that has been carried out in the period between

the cost cut-off date and the valuation date”


7

Basic principle

• Net sales value uses the application for payment as the baseline

• Application adjusted as follows:– Overmeasure – Deducted– Undermeasure - Added–Materials on site - Deleted


8

Basic principle

• Net sales value uses the application for payment as the baseline

• Application adjusted as follows:–Overmeasure – Deducted–Undermeasure - Added–Materials on site - Deleted


9

Documentation supporting the CVR

• Internal valuation broken down into a set of allowances• Overmeasure schedule• Undermeasure schedule• Cost statement• Subcontractor liabilities• Buying reconciliation• Materials reconciliation• Cost to complete exercise• Estimated final account/profit margin• Architects/Engineers certificate• Narrative explaining variances


10

Cost statement


11

Adjustments for work in progress


12

When to report a loss?


13

Internal and external bills


14

Adjustments

© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 15

To production: Please change “cummulative and cut off” to “cumulative and cutoff”.

A more complex example

17

Discussions at CVR meeting

• Profit release• Cash flow• Turnover• Items in dispute– Variations– Claims

• Items for management action


18

cost valuation reconciliation. when usually commences after the external valuation time dependent...

Documents

andrew ross

peter williams

john wiley sons

basic principlenet sales

valuation date

valuationnet sales value

documentation contd

cost cutoff date