Project Budgets & Variations

PROJECTS

Everything in Muli construction accounting software is managed by a Project – even the Muli General Ledger year is a project in its own right (for the financial year).

Each project is reviewed for:

• Short Term Cash Management
• Long Term source or use of funds / profitability

Muli have implemented a fully audit-able & Australian Tax Office approved process for determining the earned value of profit or loss emerging from a project.

All external projects assume, or have a requirement for, a contract value or scope of works.

CONSTRUCTION MANAGEMENT PROJECTS

When companies provide Construction Management services, certain parts of the project may have open income and expense amounts, but they should still have a clearly defined contract sum for services rendered by the company.

These projects would be handled in Muli by raising two consecutive projects:

• Open Book Project with the Client
• Complementary Project where the Company charges the client project for services rendered at agreed rates or stages; deducting its direct expenses for providing services and therefore making a contribution to overheads in each accounting period.

CONTRACT BUDGET

The original contract value is entered as the Contract Budget when first loaded. A project framework is used to break the budget down into the items and major elements for purchase orders and subcontracts.

Muli requires budgets being available before it will allow purchase orders or subcontracts to be raised.

PROJECT VARIATIONS

The nature of project based industries is such that the value of a variation to the scope of works is often many times the gross margin to be made from the project.

Stringent processes covering a client's variations and subcontractors' amendments are vital in achieving effective management control and accurate financial reporting throughout the projects life.

For variation management, Muli has adopted a framework of:

• Ballpark Variations – raised once a change in scope of works is known
• Submitted Variation – a firm $amount is submitted to the client for approval when the scope of works is quantified
• Approved Variation – upon client approval

Muli requires an Approved Variation before allowing an increase in the Budget amount.

A provisional distribution of variations are permitted as follows:

• expected outcome from budgets may be pre-entered
• are shown on internal reports only
• do not update the contract value.

At the time of distributing a variation to a head contract you can flag updates to individual subcontracts and progress claims.

Download the latest Muli Project Budgets & Variations Fact Sheet