The number that matters on a cost report is not what has been spent. It is what the project is now forecast to cost.
Most clients look at a cost report and go straight to the amount certified to date. It is the least useful figure on the page. It tells you what has already happened, and nothing you can still act on.
Committed cost, not certified cost
Committed cost is everything the project is contractually obliged to pay — work orders issued, materials ordered, variations instructed — whether or not it has been billed yet.
A project can be forty per cent certified and eighty per cent committed. The gap is the part clients tend to discover late.
Forecast cost at completion
This is the single number worth arguing about every month: committed cost, plus the cost to complete the remaining work, plus a realistic allowance for the variations still coming.
If that number is moving upward month on month, the project has a problem regardless of how comfortable the certified figure looks.
Contingency drawdown tells the story early
Plot contingency remaining against work completed. If half the contingency is gone at thirty per cent completion, the trend is established and the remaining seventy per cent will not be cheaper.
Contingency is not a reserve to be protected until the end. It is an instrument for measuring how well the project was estimated, and it should be read that way from the first month.
