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Cost-to-Complete

In the event of a change in lender or contractor, it would be important for the client to know if the project is on track for completion based on work in progress and construction expenditures to date; or if additional financial resources would be needed to complete the project. A Cost-to-Complete report is designed to provide an assessment and opinion on the construction of the work in place and the balance of the work remaining. A site visit will be performed after receiving documents to assess work in place versus work remaining. A complete document and cost review could be included in our analysis. The Cost-to-Complete is tailored to each client’s need as each project will have specific requirements either mandated by the client or recommended by Partner to successfully meet the client’s needs and address the risks.

What's Involved

 

A Cost-to-Complete includes the following:
  • Identify the overall scope of the construction/renovation work.
  • Review the completeness and adequacy of construction documents, i.e. plans and specification, budgets, contract agreements, etc.
  • Assess documents are up to date, executed and approved as appropriate.
  • Visit the subject property and review construction in progress. Interview the owner and general contractor.
  • Identify the overall scope of the construction work remaining and identify changes in original scope, budget and schedule.
  • Review and opine on the budget available to complete the scope based on the provided budget remaining. This includes a review of the most current processed payment application and CPM Report (if applicable).
  • Provide an opinion as to the reasonableness of the project’s current schedule and ascertain its level of completeness.
  • Assess costs paid to date versus estimated funds remaining, and the remaining time allotted for completion of the project.
  • Identify any other related construction or project issues that may impact the contract schedule or budgeted costs in order to complete the work.

Related Insights

Frequently Asked Questions

Cost-to-complete is typically calculated by assessing the remaining scope of work, estimating the costs associated with completing that work, and adding them to the actual costs incurred to date. Various methods, such as bottom-up estimating, parametric estimating, and expert judgment, may be used to determine the remaining costs.

Cost-to-complete should be assessed regularly throughout the project lifecycle to track progress, identify any deviations from the budget, and adjust financial forecasts accordingly. It is often reviewed during project status meetings, budget reviews, and financial reporting periods.

Earned Value Management (EVM): A project management technique that tracks progress, budget, and schedule performance.

Accuracy depends on the quality of historical data and assumptions made.
Unexpected events can significantly impact the final cost.

Digging Deeper

 

Collect and Review Key Documents
  • Development budget breakdown inclusive of hard and soft costs
  • Construction schedule
  • Construction contract
  • Construction subcontracts
  • Change orders
  • Pending/Potential change order log
  • Building Permits/Permit Log
  • Testing reports and inspections
  • Detailed hard cost budget and most current pay application
  • Procurement and tracking list with critical and long lead items schedule

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