Wattie Wolfe Company's project cost control is computerized and is particularly set up around the principle of cost against budget, cost, against progress, and direct comparison of estimated cost to actual cost. We have determined that one of the most forceful control features is to control the disbursements of funds until certain guidelines have been met.
The controls are as follows:
- Through the use of the computer, we are able to provide monthly cost statements within ten days of the closing of the books for the month. These statements show the updated (as bought) budget, together with actual costs as an aid for making accurate cost projections.
- As the project is bought out, we look for and require Subcontracts where labor and material are involved. Payment to the Subcontractor is withheld until the Subcontract has been fully executed and all initial requirements met.
- Where Subcontracts are required, we further adopt control procedures restricting payment until Payment and Performance Bonds and Insurance Certificates are in order. These are controlled through the use of computer printouts.
- In order to protect the Owner's financial positions, as well as the financial position of our Company, we restrict payment until we know that partial or complete lien releases have been obtained, and until such time as we obtain payment from the General Contractor. We find that these procedures have a direct beneficial bearing on the effectiveness of the Subcontractor; and at the same time, avoids the possibility of voiding a Subcontract Bond. These same cash control procedures are employed to finalize Change Orders on a current basis in dealing with the Subcontractors.
- As an additional aid to protect each job, we have adopted a procedure of taking the funds on a given job and paying only those bills applicable to this job with the above mentioned funds. By matching the receipts with the disbursements, we are able to keep the job on a self-sustaining basis as well as a current basis.
- As a final step, the overall profit projections are consolidated and compared with the overall budget for the Company on a monthly basis in order that corrective steps can be taken on an individual or consolidated basis if any deviation from the budget would indicate a problem.