Companies usually keep good control of spend and budget. What makes the difference is the final cost forecast, because a project can be under budget in spend and well over it in forecast, and commitments signal the deviation months before the invoice does. We put the control in place on the systems the company already has.
Our view
- 01
The final cost forecast is reviewed every month on technical judgement, with signed commitments and open risks, without waiting for invoicing to correct it.
- 02
Every deviation is read in terms of returns. CAPEX control is connected to the financial model, and each update recalculates the IRR and debt cover.
- 03
The recovery levers are few and well known. We quantify the effect of each on IRR and cash before choosing, and the decision rests with management.
What we deliver
We put the process in place on the company's systems, to the standard that lenders and their technical adviser apply.
- A cost structure shared with the schedule and the financial model.
- The monthly close, with commitments, actuals, forecast, variance analysis and report.
- Decision thresholds, setting which deviation the Project Manager updates, which goes to management and which to the committee.
- Contingency justified risk by risk, and the drawdown schedule.
- Training for the team, and the indicators and meetings the company uses to follow the process, with our support if needed.
Agents and tailored tools
The CAPEX control demonstration in the video reproduces this flow. The agent detects the deviation in a line item and, if it stays below the threshold, updates the forecast and records it. If it exceeds the threshold, it calculates the effect on the IRR, alerts the Project Manager and proposes a recovery plan. We add it once the process is working and if the company decides to take that step, and the decision on the plan remains with the Project Manager and management.
What it connects to
The baseline comes from the feasibility study and the contingency from the risk assessment. The schedule spreads the cost over time, the RACI matrix sets who approves each change and with what threshold, and each forecast update recalculates returns in the financial model. At close-out, the final cost and outstanding retentions pass to the handover, and the deviations to the cost benchmarks of the next projects. Cost is fed by what feasibility, risks and the schedule already produce, without anyone having to rebuild the figures.