Cost Value Reconciliation (CVR) is an often underused project management tool, but it is a vital component in ensuring construction projects are completed within budget.
Cost Value Reconciliations are specific to the construction industry, and they measure costs against budgets on construction projects.
Very similar to a company’s balance sheet, the actual costs of a job are compared against the total value of the works carried out (including the profit) to give a bottom line figure.
Report on profitability
Cost Value Reconciliations are often completed by contractors and then reported to the management team on the profitability of a job in progress.
They are typically done around the time of the interim valuation of works completed to date, and then again upon completion of the job.
The management team may also use the bottom line figure when negotiating final accounts upon completion of the project.
Whether you’re a main or subcontractor, CVR reports can be extremely useful to your business.
Create more accurate forecasts by using historical CVR reports
Analysing historical CVR reports can help construction businesses to forecast the profitability of future work, which can be an extremely useful tool when it comes to identifying issues and dealing with them quickly.
Unfortunately, cost value reconciliation is still underused in the UK construction industry, despite boasting several business benefits, including greater peace of mind along with:
- Minimise overspending
- Control ongoing costs
- Increased accuracy of future project pricing
Easy to use Cost Value Reconciliation software
Our construction-specific accounting and job costing software, Evolution Mx, has an add-on Cost Value Reconciliation module to enable easier and more accurate creation of CVR reports.
If you would like to find out more or book a demonstration please contact us today.