I’ve always prepared monthly project cost reports for my projects. They’ve often been the fun part of the project where we’ve seen how well we’ve done that month on the project – how much profit we have made. Of course there have been some projects where we’ve lost money and these cost reports haven’t been quite as fun. These cost reports produced their own challenges as we tried to figure out where we were losing money and what we could do to recover the money and prevent further losses in the future.
Construction project cost reports can provide a huge amount of valuable and useful information which can literally save projects, save companies, and save lots of money. But unfortunately some cost reports are wholly inappropriate for the construction industry, others are completed poorly, and a few take an inordinate amount of time to complete. Many don’t utilize the correct information - all of which can mean that the project team wastes their time producing misleading or useless data. In some cases the data may be out of date by the time it’s produced while in other cases the data is simply ignored.
The Good – How Cost Reports Help
Make sure your cost reports process is setup to help in the following ways:
Unfortunately some cost reports can be complex and time consuming to prepare. Furthermore contractors sometimes make errors in their cost reports which then provide bad data. Occasionally management ignores the cost report and doesn’t take action to figure out why the project is incurring losses, or they misinterpret what the cost report is showing.
Some Project Managers leave the preparation and interpretation of the cost report entirely to their Estimators or Contract Administrators and pay little attention to the end report. They view it as just another document produced for their senior managers.
You’ll likely find the following problems with costs reports:
But even when the project team has all the correct information we can encounter ugly, dangerous problems:
This article was first published on the Insightful Accountant website. Click the link to continue reading.
Written by Paul Netscher
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The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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