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 on continual 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.

THE TURNOVER STATEMENT The list of BOQ should be brief. Major BOQ item should 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.

Site WIP Work done billable but not billed. Cut and bent bars at site at BOQ rate. Full length bars lying at yard (Issued from stores) less wastage. Materials The abstract of month wise cost of materials required 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, unit material 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

/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/ labour supply 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.

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 the detailed 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

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 by CPE. 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

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 power cost 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

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 advance 2) 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

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

and Budget preparations to control the Profit and loss of the particular Project.