Cost reporting
Cost reporting is a process used to inform a client (or other party) about the magnitude of a construction project’s predicted, or actual cost. This can be expressed either in absolute terms or as a variance compared to the project budget.
Cost reports are typically prepared by a cost consultant (such as a quantity surveyor) and updated regularly (perhaps monthly), to keep the client informed and to help them and the project team control costs.
Typically, cost reports will evolve through the life of the project, developing in detail and accuracy as more information becomes available about the nature of the design, and then actual prices are provided by specialist contractors, contractors and suppliers, and actual costs incurred.
A cost report will generally include all the costs incurred by the date of the report, where they are known, a forecast of the costs likely to be incurred during the rest of the project, in so far as these can be foreseen and estimated, and risk allowances for the possibility of unforeseeable costs. Contingencies to cover these risks are often expressed in terms of percentages. The percentages applied are at their greatest in the early stages of the project when there are the greatest number of possible risks, but they can then be reduced as better particulars about the project become available and some risks have passed or been overcome.
It is important to be clear what costs will be included in cost reports. For example, the client may have costs that, whilst they are directly related to the project, they would prefer to account for them themselves. This might include; land acquisition costs, specialist plant or equipment, furniture, construction contracts outside of the main contract and so on.
In the absence of a single, standard type of cost report format, or specific formatting requirements by the client, most cost consultants will develop their own format for cost reports.
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