Financial Management of Construction Project for Joint Venture
A large Finnish city chose a Joint Venture formed by two Contractors to carry out the railway extension project.
The Joint Venture purchased a general-purpose financial system to support its operations. In addition, the Joint Venture identified the need for its own Cost Management system, which would enable Construction Management to follow up and forecast costs. In addition to cost information, the Joint Venture needed a place to assess the project's income
The Cost Management of the Joint Venture
PLM-Zone delivered a Cost Management service suitable for the needs of the Joint Venture. The Cost Management service was integrated with the Joint Venture's financial system. PLM-Zone implemented the integration as part of the delivery of the Cost Management service. The Joint Venture focused on the management of the construction project.
Allocation of Actual Costs
Both contractors and other suppliers bill the Joint Venture. The task of the Joint Venture's financial assistant is to process Purchase Invoices and allocate them to the project's Activity Codes. The Cost Management service regularly obtains Accounting Ledgers corresponding to the approved Purchase Invoices from the financial system and updates the project's Actual Costs accordingly. Up-to-date cost information supports the daily work of Site Management and facilitates Cost Forecasting.
Project income and expenses
The reporting of the final cost estimate to the Project Owner is a basic function of Cost Management service. In addition, PLM-Zone implemented a way for the Joint Venture to assess the project's income to the Contractors. Both Contractors need a reliable estimate of the project's turnover and earnings for their own investor reporting.