Cost Value Reconciliation: How to Make a CVR Report

Margins in construction are thin, decisions are constant and cash flow can shift quickly across a project’s lifecycle. That is why cost value reconciliation is a core discipline on UK construction sites.

A well-prepared CVR report gives contractors visibility into performance, forecast movement and emerging risks, helping teams stay commercially grounded as work progresses under real-world delivery pressure every day.

What Is Cost Value Reconciliation (CVR)?

At its core, cost value reconciliation is a recurring financial process used to compare the value of work completed against the actual construction costs incurred at a specific point in time.

It consolidates data from valuations, cost ledgers, commitments and forecasts to calculate the current position. The exercise is repeated periodically, typically monthly, with each cycle updating previous figures to reflect progress, adjustments and newly recorded costs across all packages, variations and remaining scopes captured within the live cost system period end.

ProjectManager improves cost value reconciliation by bringing together cost, progress and performance data in one platform. It’s easy to compare planned value, earned value and actual costs throughout a project. Real-time data feeds into dashboards and financial reports, helping project managers measure earned value against budgeted and actual costs. Sign up today for a free 30-day trial.

Why Is Cost Value Reconciliation Important in Construction Projects?

Without a structured CVR cycle, construction projects risk losing control over cost movement and commercial exposure. Cost value reconciliation provides early insight into overspend, under-recovery or margin erosion before these issues become contractual disputes. By aligning financial data with site progress, the process supports informed decisions on procurement, variations, cash flow management and corrective action throughout the build across complex, fast-moving construction environments with multiple stakeholders and reporting obligations attached.

What Is a CVR Report?

A CVR report is the primary commercial output of the cost value reconciliation process, bringing cost, value and forecast data into a single financial snapshot. It records the current project position, expected outcome and movement since the previous period. Because it translates live site activity into measurable financial results, the report becomes a critical reference for commercial decisions, management reviews and corrective action across the project lifecycle and governance.

When to Make a CVR Report

A CVR report is produced at defined commercial intervals rather than at random milestones. It is typically prepared after monthly valuations are agreed and construction costs are fully captured, but before forecasts are locked for the next period. The timing ensures decisions are based on complete, current data. Common triggers for preparing a CVR report include:

End-of-month commercial close
Agreement of interim valuations
Significant variation or scope change
Emerging cost overruns or forecast movement
Management review or lender reporting requirements
Project cash flow or funding assessments
Preparing for contractual negotiations ahead

Who Is Responsible for the Cost Value Reconciliation Process?

In UK construction projects, cost value reconciliation is led by the quantity surveyor, with accountability sitting firmly within the commercial function. Although the quantity surveyor owns the CVR, the process depends on coordinated input from delivery, management and finance to remain accurate and commercially reliable.

Quantity surveyor owns the CVR process, prepares the report, reconciles cost against value, updates forecasts and explains period-to-period movement to project and commercial management.
Commercial manager reviews the CVR for accuracy and risk exposure, challenges assumptions, approves forecasts and ensures the report aligns with contractual, margin and governance requirements.
Project manager validates that reported values reflect actual progress, programme status and delivery strategy, providing operational context that supports or corrects the commercial position.
Site manager supplies verified progress, labour usage and productivity information, ensuring CVR valuations are grounded in site reality rather than purely financial system data.
Finance team supports cost period close, validates ledger accuracy and aligns CVR outputs with financial reporting, cash flow forecasting and internal control requirements.

What Should Be Included in a CVR Report?

A CVR report is structured around clearly defined sections that collectively explain the project’s commercial position, financial movement and forecast outlook at a specific reporting point.

1. Project and Contract Details

This section establishes the commercial context for the CVR report by identifying the project, contractual framework and reporting timeframe. It ensures all financial data is interpreted correctly and tied to the appropriate contract, period and responsible management role.

Project name – Identifies the specific construction project to which the CVR applies.
Client – Names the employer or contracting party responsible for commissioning the works.
Contract type – Defines the contractual arrangement governing payment, risk allocation and valuation rules.
Contract value – States the approved contract sum, forming the baseline for value comparison.
Reporting period – Specifies the financial period covered by the CVR assessment.
Project manager or commercial manager – Records the individual accountable for delivery or commercial oversight.

2. Contract Value Summary

Before cost and performance can be assessed, the CVR must establish the current value of the contract. This section tracks how the original contract sum has evolved through instructed changes, agreed adjustments and outstanding variations. By consolidating approved and pending movements, it defines the revised contract value used as the reference point for valuation, forecasting and margin analysis within the reporting period.

Original contract sum – The initial agreed contract value at award, excluding subsequent variations or commercial adjustments.
Approved variations – Formally agreed changes to scope or price that have been instructed and valued.
Pending variations – Proposed or instructed changes not yet agreed, assessed or contractually incorporated.
Revised contract value – The updated contract total reflecting original sum plus approved variations to date.

3. Cost Breakdown

Once the contract value is established, the CVR turns to the actual cost structure of the project. This section itemises expenditure across key cost headings, capturing incurred construction costs, committed spend and remaining forecast allowances.

By separating labour, supply chain and overhead elements, it allows commercial teams to identify cost pressure, assess productivity trends and understand where financial movement is occurring relative to progress and contractual recovery.

Labour – Direct workforce costs including wages, overtime, agency labour and associated employment charges.
Materials – Costs of purchased materials, deliveries, wastage allowances and price fluctuations impacting spend.
Plant & equipment – Hire, operation, maintenance and ownership costs of plant used on the project.
Subcontractors – Payments and commitments for specialist trade packages delivering defined scopes of work.
Preliminaries/overheads – Site setup, management, temporary works and time-related project overhead costs.
Other direct costs – Additional project-specific costs not captured under standard labour or supply headings.

4. Cost to Complete (CTC)

Cost to complete represents the forecasted expenditure required to finish the remaining scope of a construction project from the reporting date onward. It incorporates updated supplier and subcontractor forecasts, anticipated productivity rates and current procurement commitments, while allowing for known risks and remaining allowances. Including cost to complete in a CVR report ensures the projected final cost reflects real conditions, emerging exposure and informed assumptions rather than historic spend alone.

5. Total Forecast Cost (or Estimate at Completion)

Total forecast cost represents the projected final cost of the project once all work is completed, based on construction costs incurred to date plus the remaining cost to complete.

Including this figure in a CVR report allows teams to assess financial performance against contract value, identify margin movement and anticipate potential overruns early. It provides a forward-looking view that supports commercial decision-making and corrective action.

Formula: Total forecast cost = Actual costs to date + Cost to complete

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6. Value of Work Done (Earned Value EV)

Rather than focusing on cost, this section captures the value generated by progress on site. The value of work done converts physical completion into a monetary figure using measurement rules, agreed rates and progress assessments. It links programme delivery to commercial recovery, ensuring reported value reflects what has genuinely been achieved. By breaking progress down by trade or work package, the CVR can align earned value with interim applications and highlight gaps between delivery, valuation and cash recovery within the reporting period and contractual valuation framework agreed upon, with project controls applied.

Measured works completed – Quantified work physically completed on site, measured against drawings, specifications and agreed valuation rules and standards.
% complete per trade or work package – Progress percentage assigned to each trade or package, reflecting completion relative to planned scope baseline.
Claimed value – Monetary value claimed for completed work, typically aligned with interim payment applications submitted to the client.

7. Gross Margin and Profit

Once value and total forecast cost are established, the CVR calculates the project’s commercial outcome. This section shows whether the job is forecast to return a profit or loss and how that position is changing over time. By expressing margin in both monetary and percentage terms, it allows trends to be tracked between reporting periods, highlighting deterioration or improvement driven by cost movement, value recovery or revised forecasts since the previous CVR cycle.

Forecast profit or loss – The projected commercial outcome based on revised contract value and total forecast cost.
Margin (£ and %) – Profit expressed as an absolute value and percentage of contract value.
Movement from last CVR (up/down) – Change in forecast margin compared to the previous CVR reporting period.

8. Variance Analysis

After establishing the forecast position, the CVR examines why figures have moved. Variance analysis isolates the underlying causes behind cost and margin changes by comparing current forecasts to previous CVRs and original allowances.

This section explains whether movement is driven by operational performance, commercial decisions or external change. By clearly attributing variances, it allows management to distinguish one-off events from systemic issues and decide whether corrective action, reforecasting or risk mitigation is required within the live project environment.

Cost overruns or savings – Identifies areas where actual or forecast costs exceed or undercut budget allowances during the reporting period.
Design changes – Explains financial impact of scope or specification changes introduced after contract award and valuation adjustments.
Productivity issues – Highlights cost effects caused by inefficiency, delays or productivity rates below forecast assumptions on site.
Procurement differences – Compares expected procurement costs against actual supplier pricing, discounts or commercial terms achieved during delivery.
Risk materialisation – Records financial consequences of identified risks becoming actual construction costs within the project scope timeframe baseline.

9. Variations and Claims

Variations are instructed changes to scope, design or conditions that alter contract value, while claims seek entitlement for time or money arising from events outside agreed terms. Within a CVR report, these items directly influence recoverable value, forecast margin and cash flow assumptions.

Tracking them separately clarifies what has been contractually secured versus what remains commercially exposed. Clear visibility prevents overstating value, supports prudent forecasting and highlights negotiation priorities before final account. This section, therefore, protects commercial integrity by distinguishing approved entitlement from risk-weighted opportunity and unresolved exposure affecting the project’s eventual financial outcome across active monthly commercial reporting periods.

Approved variations – Confirmed changes agreed and incorporated into the revised contract value.
Pending/submitted variations – Submitted changes under review that may adjust value once agreed.
Potential claims – Unresolved entitlement opportunities requiring assessment, substantiation and strategic commercial management.

10. Cash Flow Snapshot

While profitability is critical, cash movement ultimately determines project stability. This section summarises how much value has been certified, what has actually been received and what remains outstanding at the reporting date. By comparing certified amounts to payments made, the CVR highlights funding gaps, exposure to delayed receipts and retention impacts. It provides a short-term liquidity view that supports cash forecasting, credit control actions and informed discussions with clients, lenders and internal finance teams.

Amount certified to date – Total value formally certified through interim valuations and approved for payment by the client.
Amount paid – Cash received from the client against certified amounts during the reporting period.
Outstanding payments – Certified sums not yet paid, indicating current debtor exposure and collection risk.
Retentions held/released – Portion of certified value withheld or released under contractual retention provisions.

11. Key Risks and Opportunities

Looking beyond current figures, this section captures forward-facing factors that could alter the project’s financial position. It records known cost risks, emerging commercial opportunities and the actions required to manage them. By assigning ownership and documenting mitigation strategies, the CVR moves from passive reporting to active commercial control. This visibility allows teams to anticipate downside exposure, pursue upside recovery and ensure accountability for managing financial uncertainty before it impacts margin or cash flow.

Known cost risks – Identified events or conditions likely to increase costs beyond current forecast allowances.
Commercial opportunities – Potential improvements to value or margin through recovery, efficiencies or negotiated outcomes.
Mitigation actions – Agreed steps to reduce risk impact or maximise identified commercial opportunities.
Ownership (who’s dealing with it) – Assigned individual responsible for managing, monitoring and closing each risk or opportunity.

12. CVR Summary

Closing the report, the CVR summary distils detailed financial data into a clear commercial narrative. It confirms the overall project position, highlights material changes since the previous reporting period and identifies issues requiring attention. Rather than repeating figures, this section interprets them, ensuring senior stakeholders understand where the project stands and what must happen next. A strong summary supports timely decisions, reinforces accountability and aligns commercial priorities across delivery, finance and management teams.

Overall commercial position – High-level statement of forecast profit, loss or break-even status at reporting date.
Key changes since last period – Summary of significant movements affecting cost, value, margin or cash flow.
Actions required – Defined steps needed to address risks, recover value or correct forecast issues.

Free Related Construction Project Management Templates

We’ve created dozens of free construction project management templates for Word, Excel and Google Sheets. Here are some that can help during the construction cost planning process.

Project Initiation Document (PID) Template

This project initiation document template helps formalise how a project will be governed from the outset, documenting scope boundaries, decision-making authority and key roles. It creates a shared reference point that supports approval, accountability and controlled mobilisation before execution begins.

Bill of Quantities Template

This bill of quantities template structures project quantities and descriptions into a clear, itemised schedule, enabling accurate pricing, transparent cost breakdowns and reliable comparison of contractor tenders throughout the procurement and cost-control process.

Payment Schedule Template

This payment schedule template sets out the timing and structure of project payments, linking value milestones to cash flow. It supports financial planning, reduces payment disputes and provides visibility for both contractors and clients during project delivery.

How ProjectManager Improves Cost Value Reconciliation

ProjectManager’s structured data helps you perform accurate cost value reconciliation for your construction projects. Use tools like baselines, percent completed, logged time and dashboards and reports to document performance for financial control reviews. When you can compare current project data to your original plan, it’s easier to project future cost performance and estimate final cost at project completion. Watch our short video below to learn more about how our software can support your construction projects.