A construction cost report exists so that somebody can make a decision. That sounds obvious and most reports fail it, because they are built to record the position rather than to prompt action.
The test is simple. If the report tells a board something they can still change, it is doing its job. Where it tells them what happened last month, it is a minute.
Four numbers carry the report
The contract sum as adjusted to date. What the client has committed to, including instructed variations, so the reader knows the current contractual position.
Forecast outturn. What the scheme is expected to cost when finished, including change that is anticipated but not yet instructed. This is the number that matters and the one most often absent.
Cost to complete. Forecast outturn less certified expenditure, which is the figure a funder tests and the figure that tells you whether the money left is enough.
Movement since last report, with reasons. Not a table of differences, but a short list of what moved and why. A reader should be able to understand the change in a minute.
Anticipated is not the same as instructed
The most common weakness in cost reporting is that only instructed change appears. Items known to be coming, being priced, or being argued about sit outside the report until they are agreed.
That produces a report which is accurate and useless, because it describes a position everybody knows is out of date. A board reading it believes they have headroom they do not have.
Anticipated change belongs in the forecast, clearly separated from instructed change and with a stated basis for each figure. Where a value is uncertain, a range is more honest than a single number and just as actionable.
The risk register lives in the report
Contingency should not appear as a single line that reduces mysteriously. It should appear as a register of named items, each with a value, showing what has been released, what has been drawn against, and what remains.
That turns contingency into information. A board can see that ground risk has retired, that a planning condition is still open, and that the remaining allowance is or is not adequate for what is left.
It also prevents the failure where contingency quietly absorbs ordinary change until it is gone, and nobody notices until the protection is needed and absent. Building the register properly is covered in setting a construction contingency.
Cash flow, not just cost
Cost and cash are different questions and boards need both. A scheme can be on budget and short of money, particularly where a funding facility has drawdown conditions or where retention and payment terms shift the profile.
A forecast of expenditure by month, updated against the actual programme, is what makes that visible. Where the scheme is funded, that profile should reconcile to the drawdown schedule, because a mismatch between the two is a problem long before it is a cost.
The lender view of the same information is set out under what we do for the lender side.
What to leave out
Photographs that do not carry commercial information. Long narrative descriptions of progress that a programme shows better. Tables reproducing the valuation in full. Anything that appears every month unchanged.
Length is not thoroughness. A report that a director reads in ten minutes and understands is more useful than one that is comprehensive and unread. Detail belongs in appendices for the people who need it.
The test for every section is whether removing it would change a decision. If not, it is there for the writer rather than the reader.
Consistency is what makes it useful
The same headings, the same order, the same definitions, every month. A reader who has to relearn the document cannot see trends, and trends are where the value is.
Where a definition has to change, say so explicitly and restate the prior month on the new basis. Silent redefinition is how a report loses credibility, and once lost it is not recovered.
The situations that arise where reporting has not been consistent are described in hidden cost exposure.
What this means for you
Ask for forecast outturn and cost to complete on the front page. If your report does not carry them, it is not telling you the two things you need.
Then ask what anticipated change is included. A report showing only instructed change is describing the past, and by the time it describes the present the opportunity to act on it has usually gone. Our approach sits under cost control and variations.
Getting reports you cannot act on?
Send the last three. We will tell you what they are not showing you and what a useful report on your scheme would contain.