Cost forecasting: financial reporting

In summary, the financial report should be easy to understand. It should present the key information in a simple summary, with more detailed supporting information also provided. Those drawing up the report should bear in mind their audience and the information they wish to get across to their readers. The audience will, primarily, be interested in the answers to the questions listed below.

• What was the approved budget for this project?
• What is the anticipated out-turn cost?
• How much risk monies remain?
• How much money has been expended to date?
• When are the remaining monies likely to be required?
• If there is an overspend situation, what corrective actions are being taken?

Supporting information should be included by way of explanation and to provide an audit trail. However, the provision of accurate headline figures is the most important element.

Be realistic, also, about the cost impact of change - it is easy to be over-optimistic, but that approach leads to uncontrolled cost over-run. Realistic figures enable corrective strategies to be put in place, should problems occur.