The Monthly Contract Cost & Value Report (CCVR) is designed to facilitate overview monitoring of the project against the current forecast at a Senior Management level. 1
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GENERAL
1.1
The CCVR CCVR Report Report encompasses encompasses a full reconciliation reconciliation of the cost cost the project project has incurred and the allowances generated for the quantity of work actually executed.
1.2
The mandatory mandatory reports for Senior Senior Management review review the cumulative cost and and allowances to date for the project against the Forecast and highlights trends and exceptions to the same.
1.3
The project project team will will be focused on the monthly performance performance of the project. Clearly Clearly the results should reflect the position they anticipate from the results of the cost control procedures implemented and monitored.
1.4
The CCVR CCVR should not be relied upon upon or used as a substitute for project cost control control procedures. Clearly by the time the report is issued issued a significant expenditure will have occurred which cannot be corrected.
1.5
The report report and the identification of trends and and exceptions rely upon the quality of the Forecast prepared and correct allocation of cost and allowances to the forecast.
COST CODING
2.1
At commencement commencement of the the project the cost codes for monitoring monitoring the project s performance should be identified- see copy attached
2.2
The objectives of setting setting project project specific cost codes are: (i)
to sub-divide the total value of the project into smaller parts for monitoring.
(ii)
to convert the standard S curve expenditure encountered on any project into elements which are closer to straight line expenditure for ease of monitoring.
(iii)
to establish establish cost codes which encompass a series of site operations or group of work items in a bill of quantities and which are readily identifiable to members of the project team.
(iv)
to achieve a simple cost coding structure to which which resources are in the main dedicated simplifying allocation and minimising misallocation and administration.
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2.3
The cost codes will commonly consist of a matrix of resource and work type (two levels of code).
2.4
On occasions, a third level of location may be appropriate for instance where a project consists of several remote locations. When required, careful consideration should be given as to whether location is applied to only directs or to both direct and indirect allowances and costs.
2.5
Only on minor projects or cost reimbursement forms of contract is it envisaged that cost coding on the basis of resource only (one level), will be applied.
2.6
In general, the number of cost codes should be kept to the minimum necessary to effectively monitor the project. A proliferation of costs codes leads to misallocation, additional administration and a level of detail not conducive to over view management of the project.
2.7
Where detailed feedback is desirable for estimating purposes such data can be more efficiently and accurately obtained outside a project cost coding system by the utilisation of appropriate method study and work- study techniques.
GENERATION OF ALLOWANCE TO DATE
3.1
It is the responsibility of the Project QS to accurately generate allowances. This will require accurate measurement of the works executed.
3.2
Measurements will normally be based upon those prepared for payment adjusted for the Interim Payment Application adjusted for known over and under measurements.
3.3
The generation of Allowances to date is considered under five headings:
3.4
(i)
Direct
(ii)
Indirect
(iii)
Variations
(iv)
Materials Unfixed
(v)
Contribution
Direct For projects where the Contract is on the basis of re-measurement, allowances are generated from the internal quantities (actual quantities) of work executed to the relevant period end multiplied by the resource allowances. The resource allowances are those established at tendering. The allowances are not to be adjusted. They may be reallocated (from one resource type to another) or further sub-divided for monitoring purposes. Allowances for variations (other than purely quantitative variations) are to be set as per Clause 4 Item 4.6 (c) below. For Projects where the contract is on a lump sum basis allowances are to be generated on the basis of quantities factored by the ratio which the fixed quantity in the Contract bears to the most recent assessment of the actual total quantity to be executed.
3.5
Indirects These are all the items in the general expenses or further items appearing on the Tender Summary Sheet (TSS). Allowances are generated on a fixed, time-related or quantity basis as appropriate. For time-related allowances the draw- down of allowances should consider the programme period and any potential over-run. The draw down of allowances on a shorter/accelerated programme requires approval of the Operations Manager and Commercial Manager.
3.6
Variations These may be purely of a quantitative nature or involve the requirement for agreement of new rates or prices. The process for generating allowances is: (a)
Principle The principle that payment will be made for the item of work to be executed must not be in doubt. If there is any such doubt the item is to be considered to have the status of a claim for additional payment and not a variation. No allowances are to be generated for claims unless formal agreement has been obtained with the Employer and the matter confirmed by the Operations Manager and Commercial Manager.
(b)
Quantity Basis is actual quantities (Iqty, Internal Qua ntity).
(c)
Allowances Allowances are to be given to the item which equate to its worth under the Conditions of Contract. The allowances taken clearly set the minimum rate or price to be agreed with the Employer. Externally the target is to maximize the rate or price (within the limits of credibility) and this is a separate exercise to setting allowances. The cost also sets a bench- mark as to minimum recovery desirable. However, the judgement of Worth under the provisions of the Contract may be less than cost. Conversely abnormal profit where the allowances determined are far in excess of cost must be considered conservatively and highlighted to management.
3.7
Materials unfixed Allowances generated for unfixed materials are to be on th e following basis: (1)
(2)
(3)
The quantity unfixed is established by a physical stock inspection. This quantity is to be reduced by the greater of: (a)
the estimator s allowance for wastage (stocking, handling and fixing)
(b)
site experience of wastage incurred.
The allowance nett rate is to be the lesser of: (a)
the unit allowance for the material when fixed
(b)
the cost of purchasing the material.
Where labour and plant is expended on site processing or manufacturing raw materials allowances can be taken for this work on the lesser of:
(a)
The unit allowances for processing or manufacture
(b)
the cost of processing or manufacturing.
The above parameters are to ensure that:
3.8
(i)
buying gains on the material are not taken until the material is fixed in its permanent position in the works;
(ii)
buying losses are taken as material is purchased/ delivered to site.
Contribution This is to be drawn-down as a percentage of turn over in line with the last forecast.
3.9
Sundry Account Invoices to Third Parties Where sundry accounts to third parties are undertaken by the Project allowances may be generated for this work.
