Alex,
do you ask about cost reporting or cash flow management?
I suggest you to clarify your questions. Now they are too broad.
Regards,
Vladimir

Hi alex,

Insurance bond - I make sure it is accrued at the start of the project. I allocate it on the start milestone.

downpayment - i ask subcontractors to submit first their own cashflow following the master schedule. Most of the time you will need to introduce some kind of dummy activity to allocate DP. The tricky part here is, you may have to pay DP to your vendor but it does not necessarily part of your contract with the client. In this case, you may have a - cash flow at certain point in the project. This - cash flow will distort the Earned Value Analysis.

I think it’s worthwhile to discuss also time related cost such as Project Management cost, Site Management cost and Office Overhead cost. In this case I also introduce additional activity line item then allocate the cost.

Some of these activities shall be used for internal purposes only, not for clients viewing. Please note that at the start of the project, these allocations are just estimated allocation. You may need to tweak a little bit as you progress with the work.

On the issue of ACWP(AV) as mentioned by Steven. You have to distinguished actual cost you billed from client and actual cost you actually paid to a vendor. This is quite tricky specially when you compare EV with AV. You may have earned 30% already in end of March but the actual 30% costs may only be realized on the following month or more. Vendors could have received their money already, but you haven’t got the money from the client yet.

In my experience, it’s all about communicating clearly to all stakeholders what it is that we’re talking about. Earned Value Analysis is a good tool, but it has many weaknesses. The good news is, with clear communication and a lot of common sense, it can be done.

I hope this helps.

Alex Wong wrote:

"Cashflow involve both incoming / outgoing of $, and not always related to the actual activity,.."

It’s a bit tangential to this discussion, but it’s interesting to note that for many years (i.e., 70s & early 80s), US Dept. of Defense contractors used to schedule costs and BCWS based on accruals at the time of the activity’s performance, but report ACWP on the basis of disbursement, i.e., when the cheque was cut.

Although there are occasions when costs must be paid in advance of work, most of the time it’s the other way around. The resulting "Disbursement Delay Distortion" led to the CPI looking much better than it should -- until after the project completion, when all the financial chickens would come home to roost as the invoices were paid!

Fraternally in PM,

Steve D.

Alex

For proposals we create the cash flow. Data is generated by Primavera and exported to Excel for print-out. After a modification of the plan, just run the report again and print.

Hope this helps

Dieter