Project Cost and Forecast

The following items have been prepared in order to establish a set of rules or ‘tips and tricks’ to be implemented or followed on a monthly basis when preparing your cost reports.  

For any of the below that needs further review or explanation, please direct questions to your Construction Manager. The following is presented in no particular order. Costing and forecasting on a project is essential for understanding the project financials, a true and accurate Project Cost and Forecast Report is critical for the company to predict company financial outlook and manage budget for the ongoing and upcoming fiscal year. This page explains general guide-lines on How-To of the Project Cost and Forecast in Viewpoint Job Cost: Cost Projection.

Typical Monthly Forecasting Notes

Predicted cost

Predicted cost is typically "Actual to Date + Open Commitment + Forecast to Complete = Projected Total"

For projects in Maestro with an Excel print out, DO NOT modify formulas.  Adjustments within the forecast to predict a final cost can be done through forecasting in the M, S, L columns or by working with accounting to correct poor budget entries or excess open PO.

In most instances, there are to be NO negative forecast to completes.  This is largely as work is not to proceed without a change order, and a negative forecast to complete would typically mean costs to come.  A few instances where a negative forecast to complete is appropriate are:

1. Where we have paid a deposit and we anticipate having the money returned.
2. Where the client has instructed work to proceed under a change directive, with final costs to be reconciled after work is completed.
3. Where we have performed work on a trades behalf (backcharge) and the work has not yet been reconciled (refer to backcharge section).

Once again, in all instances, work for the client cannot proceed without a change order or change directive.

Best Practices

Below is the best practice when doing forecasting:

• When forecasting material or Subtrade costs to be incurred, the project manager is to ensure the entries are done in the proper M&S columns of the forecast.
• Further / similar to the above, the project manager is to ensure costs are also forecasted on the correct material, subcontractor or labour lines of the forecast.  You cannot forecast different cost types on the same line.  If the proper cost type does not exist, the cost type is to be opened, and reforecasted.
• Often, costs are incurred in a cost report but against the wrong cost type.  If this should happen, the project manager is to work with their project accountant to reallocate the costs or move budget to the proper cost type line.
• PM’s are to ensure that all budgets not currently contracted/awarded are allocated to the proper cost type in the CTC.  For instance, if final clean is intended to be a trade, the budget should be entered as a subcontract cost type.  Alternatively, if you intend on buying wood direct from a supplier, the costs should be carried as a material code, not subcontractor code. This will help with the ability to review forecasts on a monthly basis and assess percentage of trades bought out, left to award etc. 
• For every projection, proper notes are to be included in the CTC report to allow the reviewer to understand the cost projections and to assist in month over month forecasting. 
• As a project progresses, proper reconciliation of open commitments is required as work scopes are complete.  For instance, at the completion of the concrete structure), formwork, reinforcing steel, concrete supply commitments should be reviewed and rationalised for any remaining costs.  These scopes also get cleaned up.

• For any items that are miscoded, they are to be reconciled monthly.

1. As the PM completes the forecast monthly, they are required to drill down into each cost and confirm proper cost code, and cost type (L,M,S).  For any miscoded items, these are to be sent as part of the forecasting review period to the project accountant to be reconciled.  Verification of completeness is to be done once complete, not in the next billing cycle.
2. Best practice is to also review all items and coding during the monthly billing cycle.  Most miscoded material items can be caught at billing time, making the forecasting cycle much easier.  

• Moving Budgets should only be done in a limited number of instances such as

1. correcting an error in budget upload.
2. moving money to or from the contingency on approved contingency expenditures/reallocations.
3. revision to planned execution.
4. Consolidation of costs codes based on trade award.
5. Budgets should not be modified to fix variance on a line by line basis.

• Cost code creation – only the Project Manager on the job can authorize the creation of a new cost code.  This means a superintendent, or the project accountant cannot open a new code.  When a code is created by the project accountant, it would be expected that the proper steps associated with the code creation has been taken. This can include

1. Creating the proper Change Order or Expenditure authorization to fund the line.
2. Conduct the proper budget reallocation to fund the line.
3. Communication with the client as appropriate.
4. Communication with the project team of the new cost code.

• It is okay to have a variance on a given labour or material line item.  We should never have a variance on a subtrade cost code.  

Report

The project cost and forecast (PCF) report is a document that contains confidential information of the project's financial status. Check the Project Cost and Forecast Report for Detail on how to generate and read it.

ONLY DRAFT BELOW

Typical step-by-step procedure

Progress Tracking and Entering

Project cost and forecasting relies on accurate field record tracking. Although this module will function without complete this, it is still recommended to do the quantity tracking as a good habit. The quantity tracking module can be found in Job Cost Section called "JC Progress Entry". Check the Quantity Tracking in Viewpoint for how to.

Once all the progress has been entered, go to progress batch, and commit this batch to the month of which the work was completed.

Reviewing Project Cost and Forecast to End of Project

First, go to Viewpoint, and locate the JC - Cost Projection.

Double click it, it will show a Form with title of "Batch Selection for {your company name}".

If you have previously opened batches, they will be displayed in the Unposted Batches section.

When initiating a batch, it's crucial to note the Batch Month field. This should correspond to the month being reported on, not the month the report is being submitted. For instance, if you're submitting a Project Cost and Forecast report for July, even if the report is being submitted in August, make sure to select July as the Batch Month.

After clicking 'OK', the 'Cost and Forecast' window will appear. While the columns you see might differ from the default view, we'll guide you on how to adjust them shortly.

In this form, there are four primary sections:

1. Orange-highlighted Area: This displays the Batch Month, Batch #, Date, and Job #. Use the 'Job' textbox to select different projects for PCF.
2. Green-highlighted Area: This section presents the fundamental contract information.
3. Red-highlighted Area: Here, you'll see all the cost codes related to your project. This includes inactive codes as well as codes without a budget or cost.
4. Indigo-highlighted Area: This area showcases all the specific data for the chosen cost code. The buttons situated at the bottom offer additional functionalities and serve as shortcuts to related forms for a more in-depth look.

A project permits only one person to conduct PCF at a given time and can exist in just one batch simultaneously. If you mistakenly open someone else's project, you have two options: either submit all your current changes or cancel your existing batch and restart the process.

You can adjust what columns to see and adjust the orders in Projection Options, follow GIF below:

the Columns I recommend you select and set in order are below:

As stated in the Morley Hopner - Costing and Forecasting Fundamentals, the Project Manager or Acting PM should go through Cost Report line by line when performing cost forecast. Below I will demonstrate with 2 examples, to showcase Labour and material/Subcontract cost and forecasting.

To effectively forecast on each cost line, you will need to be familiar with the area for data input, the graph below shows an example for a random labour cost line.

Forecast on Labour Cost Lines

For How-To on keep tracking quantities on Viewpoint, check Progress Entry.

Forecasting on Labour Cost Lines relies on 3 elements:

• remaining units - how many month/weeks remaining to this activity? or how many lineal feet of grade beam or wall left? If the budget was uploaded correctly, and progress has been entered for each reporting period, the remaining units should be auto-populated.
• hours per unit - hour many manhours need to complete 1 unit?
• cost per hour - what is the (blended) rate per hour for this activity

Those 3 items can be entered at these fields below. in the example shown, you can click on the arrow in the red box to rotate among different fields, such as Cost per Hour, to Hour per Unit.

It is important to check when is the payroll cutoff date, you can do this by examine the cost detail by clicking the Cost button in the orange box. see example below:

Each time you adjust the value in any of the field, the project value will self calculate.

Forecast on Material (or Equipment) Cost Lines - for Monthly Rentals

Similar to forecast on labour field, forecasting on material cost line relies on 2 fields:

• remaining units
• cost per units

For example, on toilets, or garbage bins, the quantity required for each month is likely different, but you can use alternative measure such as "toilet-month", meaning 1 toilet for 1 month. for a 20 month project, if you need in total 100 toilet month, then you are average at 5 toilet per month. Lets assume by month 10, you have used 40 toilets month, and month 10, you have 6 toilets on site, then that means in month 10, you have used 6 toilet-month. If you are projecting the total project still going to use 100 toilet-month, then the remaining units will be 50 toilet-month, and cost per units will be how much each toilet cost (rental + cleaning) per month. Always use actual cost on material as it reflects the actual unit cost that has incurred on this project. it should show in the red box area below:

Forecast on Subcontract or Material Purchasing Cost Lines

Forecasting on the Subcontract or Material Purchasing line would be the simplest, as the "Actual Cost" + "Remaining Committed" + "Remaing (Cost)" = "Projected Final Cost". The only field you will be adjusting is the "Remaining", by increasing the value, you are indicating, there are additional risks in this scope that you are setting money aside against; by decreasing this value, you are indicating you are confident on this scope will complete with the Projected Total Cost.

You have a "Buy Out" option, typically used in this type of cost lines, by clicking the "Buy Out" check box, you are indicating that the commitment and agreement has been made with the corresponding subcontractor and the values on this line will hold the value. This matters only when you use AutoCalculate option in Viewpoint.

Buy Out check box

Fee Reporting

After you complete the forecast process on each line item (including cleaning up the negative remaining costs), at the bottom of the "JC Cost Project" grid area, you will see a number under "Over/Under" column. In Synergy, we treat FEE as a cost - meaning forecasting FEE line is just the same as forecasting on Subcontract lines. Deduct the number you see in at the bottom of "Over/Under" column to the "Remaining Cost" in the dedicated Fee Cost Line. It is easier to "zero out" the fee first and use the total number as your new Remaining.

if the Fee increased then you are indicating you have made additional money on the project. After a full forecast, the button number at "Over/Under" should be 0.

See below example:

Once all steps are completed, you can commit the batch by following the example below:

Once the batch is committed, you can refer to Report - Project Cost and Forecast on how to export report for submitting,