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Financial Cost for the Works

Financial Cost for the Works - Calculate Man Hours Financial Cost for the Works, Example.
In this publication, we will discuss the financial requirements to complete the work outlined below.

It is a small civilian structure with two reinforced concrete bases of 10 cubic meters each. 

To make this analysis, we draw a Gantt diagram showing each of the tasks to be accomplished during the construction period. 

Next, we load into the Gantt the flow of funds we need to do the job. 

So, we develop an approximate investment plan. 

Once the investment plan has been prepared, it is necessary to define the dates and the amounts of revenue to be received for prepayment of work and as payment for work done at the date of certification. 

The result between the two tables of values, investments or expenditures, and payments or incomes determines the capital requirement. This gives us the project’s cash flow.

Cost management plan – Investment plan

Financial Cost of the Works - Investment plan
Cost management plan

The chart shows:

Monthly expenses necessary to carry out the work. 

Revenue receivable: 

The hypothesis is that we get the payment 30 days after the certification date of the month. 

To keep it simple, we establish that the profit is constant and that it exceeds the expenditure by 30%. 

This example demonstrates that the contractor must have its own funds for the first, second and third month. 

If they don’t have their own money, they have to finance it to be able to do the job.

Cash flow

For clarity, we summarize the data in a graph showing the flow of funds necessary to build the job.

Financial Cost of the Works- Flow of Funds-Table
Flow of Funds

The need for money for the first three months of work generates the financial cost.

In the next article, we describe how to count welding inches.

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Financial Cost for the Works – Calculate Man Hours

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