Cost forecasting: financial reporting

The purpose of financial reporting is to aid in the overall financial management of a project, by providing a profile of expected costs and an indication of when they will be incurred.

An accurate financial reporting system will provide the client with the information needed to ensure that the project remains affordable and that funds are available at the right time. It will compare the latest estimated out-turn cost with the previously approved budget and will ensure that the budget is not exceeded without justification.

See the RICS guidance note Cost reporting (1st edition) for more information on this subject.

Financial reports should be prepared monthly as a minimum; ideally, the financial report for a project should be an on-line live document, available for viewing at all times by the relevant parties and enabling an up-to-the-minute view of the cost status of the project.

The use of a web-based project extranet system enables live cost reports to be viewed by individuals with the appropriate authority, and is ideal for ensuring that decisions are based on the best possible information.