General Inquiries

Project WIP and Cash Flow projections

  • 1.  Project WIP and Cash Flow projections

    Posted 03-04-2019 10:51
    I just recently assumed a controller role with a mid-size construction company. My background is in corporate finance and manufacturing. This is new industry for me. Our firm does not have any sort of standardized measurements of progress on a project level.  We currently use Foundations, and I'm still learning that system.

    I would like to assist our PMs in compiling a monthly WIP and cash flow projection for each of their projects. I'm working on understanding the queries in Foundations and trying to figure out just what we need and how to keep it simple.  Do any of you already have something along these lines that you'd be willing to share or explain?

    Thank you.

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    Sunshyne Morack CPA
    Controller
    J Cumby Construction
    Cookeville TN

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  • 2.  RE: Project WIP and Cash Flow projections

    Posted 03-04-2019 15:15
    Hi Sunshyne,

    I'm not familiar with Foundation, but I use Excel for our WIP and cash flow projections. The simplest way I've found to get meaningful information out of my project management team is to talk to them about the timing of job costs. I require my PM's to provide me with a cost projection by month and by cost type (labor, material, equipment, subcontractors etc). We tend to be on the job from beginning to end, so our labor is pretty much a bell curve and material follows labor, but equipment will tend to hit all in a single month or two. From the cost projection, I can create revenue forecasting, and start to plan for cash outflows. I can also track the projected costs against actual to see if the job is trending as expected or if perhaps there is a problem on the project (schedule delays, low labor productivity, change order work given away for free, etc). More than anything, its a starting point for me to have a conversation with the PM about the project.


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    Juli Riles CCIFP
    Controller
    AIR SYSTEMS SERVICE & CONSTRUCTION
    SACRAMENTO CA
    (916) 368-0336
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  • 3.  RE: Project WIP and Cash Flow projections

    Posted 03-06-2019 09:39
    Edited by Sunshyne Morack 03-06-2019 09:51
    Thank you for your insight, Juli.  This, along with Andrew's comments and WIP sheet, helps put things in perspective for me. Something that seemed a bit overwhelming just a week ago is beginning to look quite differently as I dig in and understand my inputs better.

    Andrew, the WIP file is extremely helpful, and I really appreciate the documentation and column descriptions. It makes the file much more manageable. I'm going to implement this practice in some of my more complex worksheets.. It's easier to share and explain.

    Have a great day!

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    Sunshyne Morack CPA
    Controller
    J Cumby Construction
    Cookeville TN
    (931) 526-5158
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  • 4.  RE: Project WIP and Cash Flow projections

    Posted 03-05-2019 08:31
      |   view attached
    Hi Sunshyne,

    Congrats on the new role, the construction industry can be its own beast with regards to proper accounting. I'm unfamiliar with Foundations but being a construction software, you should be able to create the necessary reports within the system.

    Juli below mentions great points, and as she mentioned, the PM is the best (potentially the only) person to provide you with a reliable cost to complete estimate. The original budget should be reviewed at least monthly with the PM and each line should be forecast through the end of the job. It looks like you guys are a general contractor, so the good news is most of your scoped work is probably subbed out on a lump sum basis, which at least alleviates much of the guessing work (especially around labor). I've attached a WIP template that I like to utilize with clients. The WIP is the heart of your reporting and the information contained will significantly aid your management of the projects. I think it is also important to create a version of the WIP to share with your project managers so they can be involved with reporting.

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    Andrew Paul-hus CPA
    Accounting Manager
    RVG & Company
    Fort Lauderdale FL
    (954) 233-1767
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    Attachment(s)

    xlsx
    WIP Sample.xlsx   22K 1 version


  • 5.  RE: Project WIP and Cash Flow projections

    Posted 03-05-2019 12:55
    We wish you the best in your new role, Sunshyne.  I can't help you with Foundations, but I might with WIP.  CFMA offers courses on WIP:  360 View of Your WIP, and Work In Progress: A Deep Dive and Advanced Perspective of WIP.  These and many others, like The Basics of Construction Accounting, can be taken at your convenience from our 24/7 On Demand Library.  And until March 31st, you and your colleagues can save 33% on these and many other educational offerings.  Feel free to contact us to discuss your Construction Finance educational needs at education@cfma.org or call 609-452-8000.  Wishing you every success in your new position.

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    Elizabeth Lachowicz
    Director, Education
    CFMA
    Princeton NJ
    (609) 452-8000
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  • 6.  RE: Project WIP and Cash Flow projections

    Posted 03-07-2019 12:49
    Good Morning Sunshyne

    We recently converted to Foundation software (is that what you mean when you say Foundations?) - They have excellent support and training.  Your company should've been issued a user name and password for their client portal.  I encourage you to take advantage of any and all resources they have.  I recently had an over the phone training session with regard to revised estimates, WIP and Over-Under Billings as the process is a little different than our old system.  I came away with a wealth of knowledge and I'm not intimidated by the software any longer.  Their report Genie is amazing and we've been able to create various WIP related reports to assist our PMs through the process.


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    Julie Johnson
    Controller/Office Manager
    Axys, LLC
    Palmer AK
    (907) 830-8920
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  • 7.  RE: Project WIP and Cash Flow projections

    Posted 03-11-2019 13:34
    Hi, Sunshyne, and welcome to the interesting world of construction accounting. ;) We have been using Foundation for 12 years, and have been very happy with it. We recently embarked on a program to develop some custom dashboards and overall BI. One of the early accomplishments has been the creation of a cash flow tool that is linked directly to Foundation and really simplifies the process for us. I recommend that you contact Bruce at ProNovos to talk about how they can help you with this. Bruce is a great guy, and their customer service and attention to detail are unsurpassed. Bruce's email is bruce.orr@pronovos.com and his phone is (678) 908-0087. Good luck!

    Wick

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    J. Wickham Zimmerman
    CEO
    OTL
    Anaheim CA
    (714) 637-4747
    wickz@otl-inc.com
    www.otl-inc.com
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