Construction work is often carried out under contracts that involve borrowed funds. During construction, people begin to actively use resources: purchase materials, perform construction work, install equipment.
Suppliers are often not paid immediately, which leads to the formation of debt, despite the availability of funds in the accounts.
This situation creates the illusion of financial stability, but ultimately can lead to the cost of the object being higher than its sale. Therefore, in order not to go into the red, you need to monitor how money is spent on the construction site. To do this, the project manager maintains several reports:
Actual Cost Report: contains information on actual expenses at the moment, compares them with the planned budget of the construction project and identifies deviations.
Work Progress Report: shows the percentage of work completed for each stage of construction and compares it with the planned schedule.
Cash Flow Report: reflects the income and expenditure of money on the construction project, predicts the financial situation in the future.
Material Inventory Report: Shows the amount of materials currently available on site and helps plan purchases.