Zeyto Academy · Advanced · Module 45
Project cost control and reporting
Control cost by item and nature, forecast to completion, recognise revenue, read WIP and close the month (Zeyto Construction & Contracting, pre-release).
You will be able to
- Compute budget, committed, actual, ETC, forecast and variance by item and nature
- Compute CPI, SPI, EAC, ETC and VAC and read the portfolio colour bands
- Compute earned revenue, over or under billing and a loss provision
- Read profitability and build a 13-week cash forecast
- Choose the right report for a management question
- Describe the approval rules and run the month-end close
Budget, committed and actual by item
- Forecast = actual + committed + ETC; variance = budget - forecast.
- ETC = budget x (1 - progress) - committed, floored at zero.
- Read nature by nature; totals hide overruns.
Estimate at completion and earned value
- Three forecasts: row forecast, CPI-based EAC, approved estimate at completion.
- CPI = EV / AC; SPI = EV / PV; EAC = BAC / CPI.
- The tile colour is the worst of six checks.
Revenue, WIP and over or under billing
- Four methods: A billing, B percent of completion, C straight line, D point in time.
- Earned (B, cost) = contract value x cost / EAC; over or under = billed - earned.
- Provision = expected loss less loss already in the numbers.
Profitability and the 13-week cash forecast
- Profitability = contract value less forecast cost; billed net less cost shows funding.
- The 13-week forecast marks the first negative closing week.
- Read receivables and retention separately.
The reports and the views that matter
- Choose the report by the question.
- WIP reads snapshots; run the revenue first.
- Read profitability, cost to complete and WIP as a set.
Controls, approvals and the month-end close
- One ledger with guards: leaf item, right project, project open, cost not locked.
- The creator never approves; rejections need a reason; nothing auto-approves.
- The close checks drafts, approvals, revenue runs, WIP and retention, then locks.
Budget, committed and actual by item: key table
| Number | Meaning in Zeyto Construction & Contracting |
|---|---|
| Budget | The amount in the current approved budget version for that item and nature |
| Committed | What is on order and still open: purchase orders for materials and open subcontract value |
| Actual | Ledger debits less credits tagged to the item and nature, up to the date you choose |
| Estimate to complete (ETC) | Budget x (1 - item progress %) less committed, never below zero |
| Forecast | Actual + committed + ETC |
| Variance | Budget - forecast; negative means an overrun |
Estimate at completion and earned value: key table
| Measure | Formula | Our example |
|---|---|---|
| BAC | Sum of the current budget | 850,000 |
| EV | Budget x progress % | 850,000 x 40% = 340,000 |
| AC | Actual cost | 360,000 |
| PV | BAC x planned % | 850,000 x 45% = 382,500 |
| CPI | EV / AC | 0.9444 |
| SPI | EV / PV | 0.8889 |
| EAC | BAC / CPI | 900,000 |
| ETC | EAC - AC | 540,000 |
| VAC | BAC - EAC | -50,000 |
| Cost variance | EV - AC | -20,000 |
| Schedule variance | EV - PV | -42,500 |
Profitability and the 13-week cash forecast: key table
| Check | Green | Amber | Red |
|---|---|---|---|
| Margin (forecast) | 8% and above | 3% to below 8% | Below 3% |
| Cash (net billed / cost) | 1.0 and above | 0.8 to below 1.0 | Below 0.8 |
Profitability and the 13-week cash forecast: key table
| Week | Receipts | Payments | Closing balance |
|---|---|---|---|
| Opening | 120,000 | ||
| 1 | 40,000 | 90,000 | 70,000 |
| 2 | 50,000 | 110,000 | 10,000 |
| 3 | 30,000 | 85,000 | -45,000 |
| 4 | 180,000 | 60,000 | 75,000 |
The reports and the views that matter: key table
| Question | Report | What it shows |
|---|---|---|
| Which project is losing money? | Project Profitability | Contract value, budget, committed, actual, forecast and margin per project |
| Which nature will overrun? | Cost to Complete | Budget, committed, actual and ETC per nature; negative variance is an overrun |
| Are we over- or under-billed? | Work in Progress (WIP) | The latest snapshot of each project: billed against earned |
| Who holds our money? | Retention | Retention held from the client and held back from subcontractors, releases, next due |
| What must we buy? | Material Status | Per material: BOQ, requested, ordered, received, reserved, consumed and short |
| Are we paying above the BOQ rate? | Purchase Price Variance | Each purchase against the BOQ rate, last price and average; negative extra cost is a saving |
| Is this supplier reliable? | Delivery and Inspection | Days late, pass percent, rejected quantities and NCRs per delivery |
| Which subcontract needs chasing? | Subcontract Status | Value, certified, retention held, to certify, expired papers |
| How many hours did we use? | Manpower | Timesheet hours and gate check-in hours by project and month |
| Is plant idle? | Equipment Utilisation | Worked, standby and breakdown hours, and charge-out |
| How safe are we? | Health and Safety | Incidents, lost time, man-hours, frequency rate, permits, toolbox talks |