Cost value reconciliation (CVR) is a regular exercise, usually monthly, that gives an ongoing account of a contract’s profitability by comparing the cost incurred with the value earned at different points in the contract, right through to completion.
CVR is mainly carried out by contractors and subcontractors as part of their internal financial reporting. The commercial team calculates the true value of the work done to date, which may differ from the amount applied for or certified, and compares it with the actual cost, including accruals for costs incurred but not yet invoiced. The result shows the profit or loss on the contract and allows the business to forecast its final position. A good CVR highlights problems early, such as under recovery, unpaid variations or rising costs.
- Value is adjusted for over or under measurement and unagreed variations.
- Cost includes accruals and provisions for known future costs.
Related terms: cost value comparison, accruals, valuation, final account forecast.
