Budget against actual on a development: the columns that show an overrun early

A development can have paid out 40% of its construction budget, with every invoice inside its line, and already sit $50,000 over budget. A budget against actual report only shows that where it carries the commitments and the work still to price. Not merely the payments.

Paid to date is the least useful number on the page. It tells you what happened, and nothing about what is coming.

The columns a budget against actual report needs

• Original budget for each cost code, as approved at feasibility.
• Approved variations, added to the original to give the current budget.
• Committed: amounts locked in by contract, order or accepted quote.
• Paid to date.
• Still to commit: your best estimate of the costs not yet under contract.
• Forecast final cost: committed plus still to commit.
• Variance: current budget less forecast final cost.

Mastt's guide to project cost reports lists the same building blocks, and adds the pending changes nobody has approved. Those belong in a column of their own, visible without entering any total.

Set up cost codes that match how you buy

One cost code covers each contract or package you will actually sign. Site works, structure, services, finishes, fees. A code mixing two contracts can never commit cleanly, because half of it carries a signature and half does not.

Where possible the codes match the builder's progress claims and the quantity surveyor's report. The three documents then read side by side. A quote counts as committed only once somebody accepts it in writing.

A worked example

Four cost codes, part way through a build:

• Site works: budget $235,000 ($220,000 plus a $15,000 variation), committed $230,000, paid $230,000, nothing left to commit. Forecast $230,000, which is $5,000 under budget.
• Structure: budget $900,000, committed $880,000, paid $520,000, $45,000 still to commit. Forecast $925,000, which is $25,000 over budget.
• Services: budget $350,000, committed $210,000, paid $40,000, $170,000 still to commit. Forecast $380,000, which is $30,000 over budget.
• Finishes: budget $480,000, nothing committed or paid, $480,000 still to commit as a provisional allowance. Forecast $480,000, on budget for now.

Across the four codes the current budget is $1,965,000 and $790,000 has been paid, about 40%. Every line of paid to date is inside its budget. The forecast final cost is $2,015,000, which is $50,000 over budget.

Where the overrun was hiding

• Structure is nearly all committed, yet $45,000 of work is still not in any contract.
• Services is only 60% committed, and the estimate for the rest already takes it $30,000 over budget.
• Finishes looks on budget only because nobody has priced any of it.

Finishes is the line to worry about next. Switchboard Finance's guide to quantity surveyor reports notes that lenders read a large block of provisional sums as risk. Turning them into fixed quotes tightens the cost to complete.

Track contingency against the forecast

Say the project carries $100,000 of contingency, and the $15,000 site works variation came out of it, leaving $85,000. Against paid to date, that looks comfortable. Against the forecast, the $50,000 overrun leaves $35,000, with the whole finishes package still unpriced.

The same Switchboard guide notes that contingency used up early, before the major trades have started, reads to a lender as cost pressure.

The monthly routine

1. Committed updates from every contract, order and accepted quote signed that month.
2. Re-estimate still to commit for each code, starting with the provisional allowances.
3. Variations record as pending until approval, then move into the current budget.
4. Compare forecast final cost with the quantity surveyor's cost to complete before the next drawdown.
5. Explain every code whose variance moved by more than a set amount since last month.

Mastt recommends a fixed schedule: monthly for most projects, and weekly or at milestones during high risk phases.