1.Budget and Cash Flow

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Budget and Cash Flow

For preparing the budget the following should be

prepared.

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Program for Completion of the Project

This is a bar chart to be prepared by planning

engineer in consultation with Project Manager and

all section engineers. This should be based oncontinual improvement theme and with the help of

NET WORK. This will be evaluated by SBU heads.

The assumption to be considered is Release of

Drawings, Finalization of Design/Approval, and

Release of work fronts and Mobilization of major

equipment.

The critical assume, the non achievement of which

may impact the whole budget, should be

highlighted with a special covering note by PM.

Time cycle for cyclic nature activities.

Achieved Vs Projected for Balance work.

Production achieved for major activities.

Achieved Vs Projected for Balance work.

Support required from HO department wise.


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THE TURNOVER STATEMENT

The list of BOQ should be brief. Major BOQ itemshould be 80 to 90% and 10 to 20% should be

considered for miscellaneous bead. Site has to give

miscellaneous grouped items. The out of scope

work (OOSW) should be indicated separately as

shown in formats.

ESCALATION

Escalation working should be for the total job (JTD

+ Balance), latest indices to be considered and the

month of indices to be mentioned. Provisional

indices if considered should be highlighted.

MONTHLY COST BUDGET

Abstract sheet of planned revenue (income) and

expenses. JTD cost should be in line with the cost

booked in FA. Income with WIP.

Certified Turnover JTD

Uncertified Turnover JTD

(NBTR)-WIP / Deferment of installation cost.


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Site WIP

Work done billable but not billed. Cut and bentbars at site at BOQ rate.

Full length bars lying at yard (Issued from stores)

less wastage.

Materials

The abstract of month wise cost of materialsrequired based on Turnover sheet. The backup

sheet of month wise quantities of materials based

on T.O.sheet. This sheet shall form the basis of

procurement of HO controlled material.

Major Construction Material

Mix Design & JMF authenticated by HO QA/QC, unitmaterial price considered authenticated by HO

purchase department. Based on this the

construction materials to be calculated including

wastage.

Subcontractor Cost

Abstract sheet of subcontractor /PRW/labour supply

cost monthwise. The backup sheet monthly B.O.Q

items as per turnover statement & non BOQ

requirement support from subcontractor


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/PRW/labour supply for arriving monthly cost.

Approved existing rates to be considered. New

rates if applicable, that should be highlighted to

HO. 80 to 90% of subcontractor / PRW/ laboursupply quantities rate and amount must be given.

Balance can be added to miscellaneous items.

Plant and Machinery Cost

Abstract sheet of Plant and machinery cost Month

wise Backup sheet Turnover statement for BOQ &

Non BOQ items for arriving at Monthly cost.

Production per hour should be match with time

cycle. Fuel norms and spares norms as per

authenticated by CPE department. Plant required

for establishments like Offices, Stores, Labour

camps, Workshops etc., duration must be

conjunction with work programme.

Hire Charges:

Internal hire charges should be 2.35% of purchase

value per month and the external hire charges

details should be given. The commissioning data

and duration of usages should be mentioned.Installation Cost

Breakup installation costs incurred till date under

varies heads as indicated in the formats.


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Installation costs to be incurred for balance works

should be substantiated with the work programme.

Installation cost is to be worked out on the basis of

estimation and drawings. Under each items thedetailed break up of cost which constitute 80 to 90

% of the overall cost should be given.

Allocable expenses

The cost is basically divided into two parts

1)Shuttering, staging, sheet piles etc

2)Capital expenditures

Shuttering, staging, sheet piles etc

The cost is to be tracked separately for transfer

from other sites and new purchases.

For the Project specific shuttering such as Steel

form work of special shape, steel liners, Plywood

etc the entire cost is to be charged off to the

Project and only scrap values is to be considered in

other income.

For Doka sheet piles and other standard form works

and staging materials which can be repeatedly

used from Project to Project 25% of the purchased

value per annum. Quarterly should be charged to


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the cost for the new purchases all fabrication done

at site.

For the materials transferred from other sites 25%

per annum of the original cost incurred elsewhere

in other Projects to be charged quarterly to the

cost. The period to be reckoned will be from the

time of Purchase / receipt of materials upto the

date on which the items are declared surplus and

taken outside.

Capital expenditures

These are the expenses for the items fabricated /

manufactured in the sites such as launching

stress, EOT, Barges, Bridge builders / or the

capital repairs carried out at sites as approved byCPE. For such items if the entire amount is

capitalized then the internal hire charges are to

be considered in Plant and Machinery cost.

Manpower cost

The cost should be prepared month wise. The

cost is bifurcated under the needs salaries and


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wages. Salary comprises of Management Salaries

and Non Management salaries like supervisory

and staffs. The wages comprises the salaries of

Operators, Mechanics, Welders and Electricians.The salary should be done individual wise. This

can be group based as Management, Non

management, Supervisory staffs, Operators,

Helpers, Mechanics, Welders and Electricians etc

under different categories such as HO monthly,

local monthly and local daily. The man powercost should be authenticated by HR department.

Other cost

This should be made month wise which are to

worked out on the basis of estimation / trends of

costs for the last three months. The major items

such as royalties, Insurances, Guarantees,

Interest detail should be given. Finance cost

apart from BG charges, Bank charges and

interest on advances to clients, the interest on

funding from / to corporate offices is also to be


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included. The other cost to be authenticated by

HO finance department.

Cash flow

Cash flow consists of Cash inflow, Cash outflow

and Net in flow. This is to be prepared month

wise.

Cash In flow

The assumptions to be considered for Cash

inflow are as follows.

1) Payment / Recovery of advance2) Release of retention

3) Income tax % considered

4) Release of withheld / Uncertified payments

5) Payments of monthly RA bills etc (Lead

period)

Cash Out flow


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The assumptions to be considered for Cash Out

flow are as follows.

1) Credit period for the payment of major

construction materials.

2) Stock level of major materials.

For working out of cash flow the following steps

are to be followed.

1) Monthly consumption (as worked out in the

cost budget)

2) Monthly stock level - To be assessed for the

balance period.

3) Monthly purchase = Monthly consumption

+ Closing stock Opening stock

4) Monthly creditors To be assessed for the

balance period.

5) Cash Out flow = Opening Creditors +

Purchase Closing Creditors.

Conclusion:

It is so necessary to know about the

calculations the cash inflow, Cash Out flow


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and Budget preparations to control the Profit

and loss of the particular Project.

1.Budget and Cash Flow

Documents

Transcript of 1.Budget and Cash Flow