Construction - Cost Value Reconciliation (CVR) Process

Pull all actual cost entries for the reporting period: labour timesheets, materials invoices, plant hire charges, and sub-contractor invoices. Flag any costs incurred without a purchase order.

Reconcile each received supplier invoice against the relevant purchase order and delivery note. Confirm quantities match what was allocated to the project and raise any discrepancies before the period closes.

Establish the value of work completed to date. For interim-valuation contracts, use the most recent certified payment certificate. For schedule-of-rates contracts, calculate the measured value of completed activities.

Compare actual costs to date against the original budget and approved variation orders. Calculate cost variance by category - labour, materials, sub-contract, plant - and identify which areas are over or under budget.

Estimate the remaining cost to finish all planned work based on current progress and actual cost rates. Add to costs already incurred to produce the forecast final cost and predicted margin at completion.

Compile CVR findings and review with the commercial manager or business owner. Agree actions where needed - raising variation orders, tightening procurement, or accelerating invoicing of completed stages.

Labour timesheets arrive days after the reporting period closes, meaning the CVR is based on incomplete cost data every single month.

Variation orders for extra work are not raised before the reconciliation runs, understating earned value and making the project margin look worse than it actually is.

Sub-contractor invoices that have not been matched to specific jobs sit in accounts payable unallocated, leaving costs invisible in the CVR until the following period.