cost-value reconciliation

(CVR)
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 Cost-value reconciliation (CVR) brings together the established totals for cost and
value to illustrate the profitability of a company
 The CVR serves two purposes
 it forms the basis of statutory accounts
 provides management information to assist in the identification of problems, the need
for reserves, the reasons for loss and information to prevent repetition of such losses

 At each interim valuation date, normally the end of each calendar month, the total
costs to date are compared with the total valuation.
 The cost-value comparison, or reconciliation, is usually completed by the
contractor’s QS
 starting point of any CVR must always be the gross certified value
 Adjustments
 adjustments for external preliminaries claimed in valuations against the internal
preliminary schedule;
 adjustments for elements included within costing but not in the external valuation, for
example, materials brought to site on the same day as the valuation but after materials
on site were recorded
 items of over measurement not picked up by the client’s QS
 any adjustments necessary to bring the cost cut-off date and the on-site valuation date
together
 variations which have not been agreed with the client’s QS
 contractual claims for loss and/or expense which have not been agreed by the client’s QS
 possibility of liquidated damages being charged by the employer
 provision should be made for future known losses
 Once the gross adjusted valuation has been assessed three further elements are
deducted from the figure to arrive at a final residual value or margin
 First, subcontract liabilities which should cover all disciplines of subcontractor,
 second, snagging and defects which can be subdivided into two sections
 Snagging required at the end of the project to achieve handover;
 A levy to be used to cover for costs that may be incurred in the making good of defects period
before the certificate of making good of defects is issued.

 The third and final element of deduction is that of the main contractor’s core costs, that
is, labour, material and plant and other associated costs. In general, these will be supplied to
the contractor’s QS by a separate cost department within the contractor’s company

 The residue is the profit generated from the main contractor’s works section of the
project. When added to the profit on other sections, that is, the subcontract liability
schedule, this indicates the profit to date for the project.
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