Cost Value Reconciliation (CVR)
A monthly commercial report used in construction that compares what a project has earned from the client against what it has cost to deliver. The difference is the project margin. A CVR also forecasts where the job will finish financially.
A cost value reconciliation, known in UK construction as a CVR, is the monthly commercial report that tells a contractor whether a project is making money. It compares value - what has been earned from the client through certified payments, agreed variations, and interim valuations - against cost, which covers all invoiced amounts, subcontract liabilities, and accruals for work done but not yet billed. The difference is the project margin. Done consistently, a CVR also forecasts where the project will finish, not just where it stands today.
What a CVR Contains
The core calculation is straightforward: value minus cost equals margin. In practice, the report separates the current position from the forecast final position.
The value side includes certified income from payment applications, agreed variation work, and anticipated future billings. The cost side covers subcontractor payments, direct labour, materials, plant, and accruals for work received but not yet invoiced. Missing accruals is one of the most common ways a CVR can look healthier than it is.
Once the current margin is established, the quantity surveyor extends the analysis forward: forecast final value minus forecast total cost equals forecast final margin. This is the number that matters most - it tells the project director whether today's problems are recoverable before the job finishes.
A practical example: a contractor on a £2,000,000 contract has earned £1,200,000 in value and spent £1,050,000, with £75,000 outstanding in subcontractor accruals. Total current cost is £1,125,000, giving a current margin of £75,000 - or 6.25%. If the original tender margin was 8%, the CVR flags erosion of nearly 2 percentage points while there is still time to act.
Include committed costs, not just invoiced ones
Purchase orders raised but not yet invoiced should appear in your CVR as committed costs. A project that looks profitable based on invoiced amounts alone can be loss-making once committed subcontract liabilities are included.
CVR Reporting in Practice
Monthly timing is standard in UK construction, aligned with valuation cycles and management reporting. The quantity surveyor typically owns the process, pulling together the cost ledger, subcontract records, the latest application for payment, and a cost-to-complete forecast by package.
Effective CVR discipline means updating the forecast whenever the cost or value position changes - when a subcontract bid comes in higher than the estimate, when a variation is agreed, or when a risk allowance needs revisiting. Treating the CVR as a living document rather than a month-end task makes it far more useful as a commercial control tool.
Zigaflow's project tracking and job management features give construction contractors a live view of costs, committed purchase orders, and milestone-linked invoicing - reducing the manual effort of assembling CVR data at month end.
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