Contract Forecast
Overview:
Forecasting in Workbench is the best way to analyse the cost to complete figures for your projects on a monthly basis while identifying overruns and savings. This module provides the ability to view your contract from a top-down perspective, starting at the Job level then expanding to the Work Centres, Cost Categories and Activities. There are quick links to view budgets, individual transactions, POs/WOs, and adjustments that will automatically filter the results based on the line you click, allowing rapid analysis of ongoing projects and identification of abnormalities.
To use forecasting effectively, a Contract must exist with a Contract Budget, actual transactions such as AP Invoice Enquiry and Timesheets, and the Balance of Budget method in Contract Work Centres must be set appropriately. Ideally, your company will set a cut-off date every month before which all available transactions for the forecasted month should be processed. A typical procedure may resemble the following scenario:
March is the target forecasting month, and April 7 is the cutoff date for processing (one week into the following month).
By April 7, all AP Invoice Enquiry and Timesheets have been entered, all Subcontract claims have been processed for the month of March.
Forecasts are generated for all Jobs with Contracts in March, and the Project Managers of each Contract review the lines, enquire about any irregularities, and make adjustments to the cost-to-complete calculation.
Forecasts are due to be reviewed and completed by the end of the following week, after which the forecasts are reviewed by the construction team or managers.
The managers approve and lock the forecast month (using Period Ends) to prevent any further changes to the forecasts and to archive the data for future analysis.
The above is just an example since forecasting can be flexible, but note that only one forecast per contract per year/period can be saved to the system; intermittent forecasts can be saved as a document as refreshing the forecast will replace all previously generated data for the same year/period (but not Uncommitted/Risk Adjustments).
The method for the Balance of Budget (BOB) calculation in the Forecast is set on the Job’s Work Centres and can be mixed. Chose one of the following options for each Work Centres of the Job:
By Work Centre
By Activity
By Cost Category. To use this method, check the required setup in Forecasting by Cost Category.
None
Screen Guide:
When beginning with a new Forecast Period, the + New Forecast button is available in the top left corner. Clicking this button will take a snapshot as of that moment of all Jobs under the current Contract, populating the table with budgets, actual costs, expected commitments, and previous adjustments.
The system will only allow the creation or refreshing of a Forecast in the first open Forecast Period, which is the Period that displays when you first select the Forecast tab. If you believe that you have selected the correct Period and are not able to create or refresh, then the Period Ends maintenance screen will need to be checked. After opening the Period Ends screen, change the filter to "Forecast Closed = no". Then review the open Forecast Periods and close the previous/old periods that are not required.
After a Forecast Period is created, the button is replaced with Refresh Forecast, which creates a new snapshot overwriting the previously generated data (but not Uncommitted/Risk Adjustments). Please note that the data will only include items with a posted date earlier than the last date of the selected Forecast Period. For each column, there is a grand Total section at the bottom providing data for the entire contract. There is also a Delete option, off the Refresh Forecast button, that will completely delete the Forecast created (only if the Period is opened) and all its related Adjustments and Resource Forecast if they existed. Use this option with caution.
Use Delete button with caution as it is an irreversible action.
The Resource Forecast column, and buttons Forecast Labour and Forecast Plant on the Forecast screen are only relevant when using our additional functionality, Resource Forecasting, for forecasting Labour (people hours) and Plant usage.
For specific setup and details see Resource Forecasting. There is a control parameter to enable forecasting by Cost Category (BETA FEATURE - New Forecasting = Yes). And additionally to this, if Forecast Labour & Forecast Plant buttons need to be enabled there is another control parameter to enable them (BETA FEATURE - Forecast Resources = Yes).
Job lists all Jobs contained within the current contract. The values in the grid show the sum totals for the particular Job. Clicking on a Job will expand the grid to show all Contract Work Centres for the selected Job that have data. You cannot drill down into the Job level fields in the grid, but after expanding a Job you will be able to click on the blue links to drill into the data.
Work Centre becomes visible after a Job is expanded. The values in the grid show the sum totals for the entire Work Centre under the selected Job.
Forecasting 'By Cost Category' not enabled: Clicking on a Work Centre will expand the grid to show all used Activities for the selected Job/Work Centre combination.
Forecasting 'By Cost Category' enabled: Clicking on a Work Centre will expand the grid to show all Cost Categories and all used Activities for the selected Job/Work Centre combination.
Category level is visible after a Job/Work Centre combination is expanded. Cost Categories were introduced into the Forecast so that the forecast presented the same as the Job Enquiry. It allows to group Activities within a Work Centre which makes it easier to understand e.g. you could Group Labour, Plant and Materials items together rather than them just displaying as a list of codes, or grouping specific Labour activities together, having moe than one Labour Cost Category to understand your Job costs.
Activity level is visible after a Job/Work Centre combination is expanded. Only used activities (a budget or transaction already exists for it) will be shown. This is the lowest level of the Work Breakdown structure.
Current Budget displays the total Contract Budget figure for the Job/Work Centre/Activity combination or Job/Work Centre/Category/Activity combination. Clicking on this field will open a window displaying the individual budget headers that constitute the displayed value; clicking the Internal Ref field in the popup will navigate you to that specific Contract Budget.
Actual Cost is made of all Job Transactions for the selected line (Timesheets, Plant Issues, Adjustments, AP Invoices, etc.). Clicking on this field will navigate you to the Job Enquiry Transactions screen with the Year/Period, Job, Work Centre, Category and Activity already filtered (depending on the level you clicked on). Essentially this shows you all the transactions that constitute the Actual Cost field, enabling critical analysis and auditability. If you notice discrepancies, it is important that they are corrected before clicking Refresh Forecast to bring the changes into the forecast snapshot.
Resource Forecast provides a total of the Labour Forecast + Plant Forecast which match the Work Breakdown structure of the selected line. This column is only enabled when using Budget type 'By Cost Category'. These costs are defined like an internal commitment and are included in the calculation of Balance of Budget.
Expected Commitment provides a total for all incomplete Purchase Orders and Work Orders that have open/expected lines which match the Work Breakdown structure of the selected line. POs/WOs that have consumed their expected commitments will disappear from this field and will, assuming they were processed and not cancelled, move to the Actual Cost column in the form of an AP Invoice. Clicking this field will open a pop-up screen with the list of pending Work Orders or Purchase Orders. Each line will have a reference that links to the respective PO/WO. It is important to monitor your project's POs/WOs to ensure that all open amounts are still valid, as the forecast will continue to expect that amount to arrive until it is either cancelled or comes in the form of an actual invoice or claim.
Balance of Budget is a calculation as follows:
Forecasting ‘By Activity'/’By Work Centre': Current Budget - (Actual Cost + Expected Commitment) = Balance of Budget.
Forecasting 'By Cost Category': Current Budget - (Actual Cost + Resource Forecast + Expected Commitment) = Balance of Budget.
This figure represents how much the system expects you to spend after accounting for actual and committed costs already in the system based on how much you budgeted to spend. The balance of budget method can be modified in Contract Work Centres for each Job Work Centre, and can be one of the following:By Work Centre (all calculations are done at the Work Centre level and ignores individual activities),
By Cost Category (all calculations are done at the Work Centre/Cost Category level),
By Activity (the most in-depth balancing method),
or None (all balancing is done manually via adjustments, or you expect no more costs to come for the Work Centre). It is not recommended to change between By Work Centre, By Cost Category or By Activity after creating forecasts for a contract as you will encounter data issues, however changing to None can be done.
Uncommitted Adjustments are manually entered positive or negative adjustments to the calculation of the Forecast Final Cost. Depending on whether you click on this field at the Work Centre level or Activity level, you will be presented with all adjustments in the Work Centre or adjustments only for an individual Activity. Here is an example of the pop-up that appears when you click on the Work Centre Uncommitted Adjustments field:
Here you can see previous and current adjustments. You can create additional adjustments by clicking on "New Line" and completing the line details. Note that adjustments are not transactions - they are expectations of expenditure, either positive or negative, to influence the Forecast Final Cost. Adjustments are based on the project manager's knowledge, expectations, and intuition, since actual costs and commitments are already present in the table.
The Forecast Movement Summary provides a history of past Forecast Periods
For convenience, you can use the Prev and Next buttons to navigate to the previous or next adjustment rather than having to close and reenter the screen.
Remember to Save your adjustments before exiting this screen.
Risk Adjustments are in essence identical to Uncommitted Adjustments and follow the same procedure above. This field is provided to help you keep risk separate from other adjustments, or for you to use in whatever way you find useful. Some clients choose to use Uncommitted Adjustments for positive values and Risk Adjustments for negative values so that their totals can be easily viewed from the Forecast interface.
Forecast Final Cost is a calculation as follows:
Forecasting ‘By Activity'/’By Work Centre': Actual Costs + Expected Commitment + Balance of Budget + Uncommitted Adjustments + Risk Adjustments = Forecast Final Cost.
Forecasting 'By Cost Category': Actual Costs + Resource Forecast + Expected Commitment + Balance of Budget + Uncommitted Adjustments + Risk Adjustments = Forecast Final Cost.
This is the key calculation that Forecasting aims to achieve as accurately as possible. Essentially this figure is how much you as the project manager believe your project will cost at completion considering all known variables, adjustments, and contingencies. This figure is what the Contract Cashflow module uses to spread costs across the duration of the project.
Last Forecast Final Cost is the previous period's Forecast Final Cost calculation.
Forecast Movement is the difference between the Last Forecast Final Cost and the current Forecast Final Cost. Large movements between periods may indicate something unanticipated happened, variation budgets are missing, or transactions have been incorrectly coded. Ideally, a project should not move significantly from month to month unless large savings are being achieved or unrecoverable events have occurred.
Savings/Overrun calculates the difference between the Forecast Final Cost and the Current Budget, with positive amounts indicating a saving is being achieved while negative amounts indicate that the project is running over its budget.
Last Refresh shows the date when the forecast was created or last refreshed, increasing visibility of when the data snapshot was taken.
Reviewed is an optional checkbox that project managers can use to mark each line as they go through the project, or alternatively, a secondary reviewer can go through and mark each line once the project manager has made adjustments. You must click save after ticking this field and before expanding/collapsing further lines.
Completed is an optional checkbox that, when ticked, prevents further adjustments from being entered for that specific line. You must click save after ticking this field and before expanding/collapsing further lines. You can use this field in combination with Reviewed to create your own forecasting procedure.
Print is a shared button throughout the Contract tabs, but most of them require a forecast for the selected Year/Period to generate data. Commonly used reports include "Contract Forecast Summary" and "Contract by Job/Work Centre/Activity". You can have specific reports adjusted by submitting a request via our Helpdesk.
Import is available for importing Uncommitted/Risk Adjustments via a spreadsheet. Note that fields must match exactly to the template requirements provided.
Manual Line enables the ability to add Uncommitted/Risk Adjustments for Job/Work Centre/Activity combinations that are not displayed in the above forecast due to not having a budget or actuals in the system. Simply enter the Work Breakdown combination that is missing, then make adjustments as needed.
Approve/Unapprove ability is based on the user's Role/Permissions. Approving a forecast causes it to be read-only, but can be unapproved by a user with appropriate permissions as long as the financial Period is still open.
Save commits any grid changes to the system. You should save it before navigating away from this page.
BOB Setup
The Balance of Budget calculations use ‘Forecast Bal' type activities, and these activities are not visible in the User Interface other than on the Activities List; they are only used in the background for BOB calculations. The system has a default activity called ‘WCBOB - Work Centre Balance of Budget' that is used for Balance Of Budget types By Activity and By Work Centre. For BOB By Cost Category, additional activities must be created, one per Cost Category and the type must also have activity type 'Forecast Bal'. See Forecast By Cost Category for the exact setup steps.
Next Steps:
Once the forecast is approved and the Cost to Complete is set, you can create a Contract Cashflow to spread costs over the duration of your project. You can also produce margin reports via the Print button, or view the margin values in the Contract Summary tab on demand.
Depending on your claiming schedule, you can utilise the data to determine your Contract Claim amounts to your client.
FAQs:
Process Flow: