Finance is the need of every construction project be in terms of investments or expenditures. It is required in surplus to make things work. Owners have to invest a certain amount of capital in order to start the process of building as well as for completing the project. For this purpose, it is extremely important to have financial forecasts and estimations. The question of how much are you going to need is important and requires a quantified approach of assessment. Quantified estimates are necessary before moving on with the process. 

This is technical and crucial at the same time. Luckily, the process of project management includes the term of Construction cost report. If you require the foresight for your financial issues, you must have a cost report. Through this, you cannot only make expense predictions but you can also identify the financial issues and their subsequent solutions. You can easily identify the negative costs that your project is bound to suffer. 

The cost reports are drafted, maintained and analyzed throughout the lifecycle of the project which makes it extremely easy for the stakeholders of the project to identify and analyze the problems related to finances. Construction cost estimating comes in handy. The report is viewed as the ability to logically and efficiently interpret the costs that are going to be incurred in the field. As it is evident from the discussion and explanation that we are going to discuss the construction cost report in this article, you can easily have the knowledge that you require for having done such steps. The importance and significance of this is going to be the focus of our discussion. 

What is a construction cost report? 

This is the report that contains the information related to revenue and the costs incurred in the project. There is often a comparison of spending and the earned money in the project. The report usually includes the breakdown and bifurcation of expenses and income. As we indicated earlier, it is the logical interpretation of costs incurred in the field. It is prepared both on weekly and monthly basis. It is considered an important thing to do when it comes to the field reporting on line items. 

As we have maintained the basic concept of what this entails, we can easily move forward to the importance and significance of this piece of information in construction projects. Before that, let us look on what is included in it. 

What is included? 

• Costs forecasts and incurred expenses 
• Contingency and risk allowance 
• It is applied in terms of percentages. Some of the percentage of finance is reserved for covering the contingency if there occur any, and is used to contain the risks that might occur during the course of building. 

The example of expenses include land acquisition costs, construction contracts etc. 

Importance of cost reports: 

The reports are very important in terms of yielding useful information. This information helps the contractors with saving money as well as earning some additional amounts. 

Fraud and theft identification: 

The analysis of money and finances help with the identification of theft and fraud. Audits are done for material takeoffs and supply. Since the report includes even the little details and comparisons, it is easy to identify even insignificant anomalies. This can also prove to be quite useful in avoiding delays occurring because of financial crunches. Another important issue that can resolved is that of double invoicing. If a supplier is doing a double invoicing for the material and is supplying less than what is being charged, it can easily be pointed out through the reporting. 

Specification and project scope changes: 

If the scope of the project experience the slightest of change in terms of dimension and goals, the cost report would include that. Questions related to the change in material needs become easy to address properly. Having such report also make it convenient to avoid costs that are hefty and unnecessary. 

Indication of productivity problems: 

Losses indicate the level of productivity in your work. If you are experiencing losses in terms of labor, money and delays, it means that the level of productivity in your project is very low. This situation can escalate and can translate into damage to the sustainability of the project. It is important to have your finances sorted and managed so that you can find quantified solutions for such problems.

Estimations for future reference: 

Through this process, you will have references for financial estimation that you can use for the future. The knowledge of requirements and the question of how much will be managed through the precedents. This is easy and productive at the same time since it saves the effort of going through the whole process again. 

Profit margins indication and setting up the target profit: 

You can easily set up the target profit since you have already mapped the information related to expenditure and project needs. In addition, reporting of any project provides with a clear view of how much profit you are going to earn in this project. Listing the details for on line items provide with a clear view. 

Anticipated warnings for loss: 

Audits and reporting helps in providing a prior knowledge for losses. Calculations of items and expenditures make clear the possibility of damages. You can make necessary changes to the project in order to save it from potential damages. 

How the cost is monitored? 

Cost of the components for construction project is monitored and carefully calculated. There are professional teams to do the work. First, the unit price of the item is identified. It is then multiplied with the total quantity of the articles. That gives the estimate for the cost of materials and activities. This price of activities provide the knowledge of total value of the project. The teams do an analysis of quantities and estimated value of each unit. This makes the determination of deviations easy for the team. The determination of huge deviations then leads to the adjustments in costs and expenditures and the finances. 

The Construction estimators are part of the process. Their services are utilized for estimating the financial needs for the project. All of this is included in the construction cost report, which is of great significance and importance for the sustainability of the project. 

Author Bio:

My self Emma Anderson, born in Atlanta, Georgia in a middle-class hardworking family. I have earned honors in B.E in Civil Engineering, Nowadays I am working in construction estimating services company as the business development manager. My goals are to provide accurate and quality estimation and takeoff services to all of our clients in the United States, the United Kingdom, and other countries.