Source: https://www.quantsurv.com/library/cost-value-reconciliation-guide Content format: Markdown version of the public page. Content reviewed: 2026-10-14 # How to prepare a cost value reconciliation A CVR compares recognised value and cost on a consistent basis. It should explain the current position and the forecast outcome. by [Jack Butler-Kettle]() · About 4 min readShare ## Before you start Gather the valuation, cost ledger, commitments, accruals and cost-to-complete forecast for the same reporting date. Cost value reconciliation compares the value recognised for work with the corresponding cost. The difference indicates margin on the stated reporting basis. A useful CVR also looks forward. Costs still to complete and value still to earn can change the expected final result. ## Step-by-step guide 1. ### 1. Fix the reporting basis State the reporting date and how value is recognised. An application, certified amount and internal valuation may differ, so explain which measure is used. Match costs to the same period and work. Include appropriate accruals for work received but not yet invoiced, using the agreed accounting policy. Reconcile changes from the previous report and identify estimates separately from confirmed records. 2. ### 2. Reconcile current cost and value On a simplified basis, recognised value minus corresponding cost gives the reported margin. Divide that margin by recognised value to express it as a percentage. This is different from markup on cost. Always label the denominator so the percentage is not misread. [Project cost reporting and cost value reconciliation]() can establish the reporting structure and reconciliation for your project. For illustration, £80 of cost plus £20 of profit produces a £100 price. Markup is £20 ÷ £80 = 25%; margin is £20 ÷ £100 = 20%. To target a 20% margin, divide £80 by 0.80 to obtain £100. Adding 20% to £80 gives £96, only a 16.7% margin. Project gross margin and business net profit are not interchangeable. State how overheads and other costs are treated; neither measure is the cash in the bank. 3. ### 3. Forecast the outturn and compare cash separately #### Look beyond the current margin Add forecast remaining cost to cost incurred on the agreed basis. Compare this forecast final cost with the expected final value. Do not treat every submitted variation as certain income. State how agreed, pending and disputed items affect the forecast. Review procurement commitments, productivity, programme changes and unresolved scope. A healthy current margin can conceal a loss in the remaining work. #### Keep cash separate Recognised value is not necessarily money received. Costs recognised in the CVR are not necessarily payments made in the same period. Retention, payment timing and invoice dates can create a cash shortage despite a positive reported margin. Read the [construction cash-flow guide](). 4. ### 4. Assign actions from the findings Record material movements, the evidence behind them and the action needed. Name the person responsible and the date for resolving each open item. The [commercial reporting setup]() can establish an opening structure. [Project Partner Retainer]() can then support the agreed reporting cycle. **Before you finish:** Reconcile movements to the previous report, explain assumptions and identify the owner of each corrective action. ## Worked example ### The facts A fictional project recognises £300,000 of value. Its cost ledger shows £240,000, but £20,000 of received work has not been invoiced. ### What happens 1. The report includes the £20,000 accrual. Corresponding cost becomes £260,000. 2. Reported margin is £300,000 − £260,000 = £40,000. Margin on value is about 13.3%. 3. Expected final value is £500,000 and remaining cost is £210,000. Forecast final cost is £470,000 and forecast margin is £30,000. 4. The forecast margin is 6% of final value. The remaining work reduces the apparent strength of the current position. ### The figures | Measure | Current | Forecast final | | --- | --- | --- | | Value | £300,000 | £500,000 | | Cost | £260,000 | £470,000 | | Margin | £40,000 | £30,000 | ### What this shows The accrual prevents cost understatement. The forecast shows why the current £40,000 margin cannot simply be carried forward as the final result. ### Cost value reconciliation template Include cost accruals and committed exposure. State the valuation basis and avoid treating cash received as earned value. [Download blank Excel workbook]() Free blank template for your own project. The completed example is shown below. No email address required. View the completed example Completed fictional example Westhaven refurbishment · 14 October 2026 · Version 1.0 #### Cost value reconciliation template Scroll across if needed to read the whole record. A dash means no value has been entered. Cost value reconciliation template: completed fictional example | Position / cutoff | Value (£) | Cost (£) | Margin (£) | Margin / value | Basis / evidence | | --- | --- | --- | --- | --- | --- | | Current / 30 Sep 2026 | £300,000.00 | £260,000.00 | £40,000.00 | 13.3% | Measured value; costs include £12,000 accrual | | Forecast final / 30 Sep 2026 | £500,000.00 | £470,000.00 | £30,000.00 | 6% | Remaining scope and risk reviewed; not a cash forecast | Current margin is £40,000 and forecast final margin is £30,000. The forecast deterioration needs action even though the current position is positive. [Browse the Library]()