Updating the Contract Sum with Financial Statements
It is vital to the client and the design team that the project costs are effectively managed throughout the construction stage of the project. As Quantity Surveyors we keep the client informed at all stages of the project of the financial position of the contract at agreed regular intervals, usually monthly. The client is concerned not only with the current cost position but also the likely pattern of future payments over the contract period and the probable final total cost, in order that he may have sufficient funds available to finance and pay for the project.
As the works proceed on site we will produce regular Financial Statements which keep the client up to date with the estimated total final cost of the project. The report is generally in two parts, the first considers the current position on how much money the client has already spent, and the second the probable final cost of the project. The cost report is crucially important in that it can forewarn the client of any future possible increases or decreases in the cost of the project.
Our financial statements will generally include the following items:
- Quotations set against prime cost and provisional sums
- Variation orders issued to the main contractor
- Provisional quantities re-measurement
- Daywork sheets
- Contractors claims for delays/disruptions
- Other items pertinent to the contract
The adjustment of the above items will be either added to or deducted from the contract sum (less contingencies). In addition, any fluctuations provision, where applicable to the contract should also be included within the cost report. It is important that the clients forecast of total final cost includes all possible items.