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The key factors of profitability are managing your income and controlling and forecasting expenses. Therefore, having a good financial control of your project is necessary. It is then recommended to have a cost controller on the project who will monitor de performance of the project and provide the economic and financial indicators to analyze the operational and strategic management of the project.
== Why Financial control ? ==
The key factors of profitability are managing your income and controlling and forecasting expenses. Therefore, having a good financial control of your project is necessary. It is then recommended to have a cost controller on the project who will monitor the performance of the project and provide the economic and financial indicators to analyze the operational and strategic management of the project.
== Budget lifetime ==
On a financial point of view, a budget lifetime can be split in three phases :
# Tender : Budget estimation & negociations
# Work execution : Expenses control as per the initial budget
# Operation & Maintenance : O&M Expenses and Asset performance controls as per initial cash flow prediction
[[File:Financial control steps.png|center|thumb|561x561px|Budget phases]]
==== '''Tender & Commercial phase''' ====
From the early stage of the project, until the project is signed on a agreed budget and the Contract enter into force.
During this phase, main goals are to :
* Estimate properly the project cost, including potential risks of non forecasted expenses
* Run cash flow and profitability analysis depending on the energy production estimation and business model
* Optimize & Negotiate with project stakeholders to agree on a final price for the project
==== '''Work execution phase''' ====
This phase last from the entry into force of the contract until finilization of the work, including commissionning and client reception.
Cost of the project has already been agreed with projects stakeholders, hence the main goal during this phase is to monitor all the expenses and forecast the end of project budget.
This phase is called '''Financial control''' or '''Cost control''' and aim is to provide to the project manager the knowledge of where will end the project. Same apply for the planning.
==== O&M phase ====
Similarly to the construction / execution phase, Financial control during O&M is needed in order to :
* Control O&M expenses to stay within the budgeted O&M costs
* Perform effective cash flow analysis (Income & Expenses) between what was initially forecasted before project launch, and real figures
== Role of Financial control ==
== Role of Financial control ==
The production team responsible for the project is committed to forecasting end-of-work expenses that we can call the Objective. The Objective is an intangible reference which represents the common commitment of the production. Every month, the cost controller will compare the reality of expenditure to this initial forecast and present it on a topsheet. This reporting will make it possible to:
The production team responsible for the project is committed to forecasting end-of-work expenses that we can call the Objective. The Objective is an intangible reference which represents the common commitment of the production. Every month, the cost controller will compare the reality of expenditure to this initial forecast and present it on a topsheet. This reporting will make it possible to:
* Know the results at the stage and at the end of the work,
* Know the results at the stage and at the end of the work
* Compare achievements with forecasts,
* Compare achievements with forecasts
* Appreciate the future trajectory by assessing the obstacles and risks,
* Appreciate the future trajectory by assessing the obstacles and risks
* Decide on actions to influence the trajectory in order to achieve / improve the objectives set
* Decide on actions to influence the trajectory in order to achieve / improve the objectives set
It results in practical decisions, corrective measure if necessary, and actions follow-up.
It results in practical decisions, corrective measure if necessary, and actions follow-up.
== Free Template ==
If you're still here, you disearved it : Here is a template of cost control sheet.
'''<u>// Will be uploaded very soon.</u>'''