What is cost value reconciliation in construction?

Cost Value Reconciliation (CVR) is carried out in order to monitor and measure expenditures against budgets on construction projects.

They provide insight into the status and profitability of the projects while they are in progress. This allows construction companies to make critical financial decisions and reduce risk.

An alternative would be to make this analysis at the end of the project, however, it can be very risky for cash flow reasons if left to the end of the project.

CVR jobs broken down to smaller deliverables

Construction value reconciliation template

Work can be broken down in terms of structure, with the project cost codes format helping to break the work into smaller deliverables (e.g. foundations and installations, support structures, facades, etc.).

Planyard recommends doing so by following the chronological order of the jobs. This can be described as structuring the costs based on activities on the site, as seen in the below example. Such a breakdown enables management to follow project profitability in phases, so that when you are already in the middle of the project, you’ll know whether or not you managed to create profit in the first phases of work such as creating a foundation, etc.

The example works breakdown structure for buildings such as office buildings, blocks, warehouses, etc.

Budget managed from an estimate, from job costing to project income

Additionally, it’s smart to list the budget with the cost paid by the customer to enable job profitability tracking on an article level.

Cost codes and budget

Where to get the Cost Value Reconciliation template?

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