What is a CVR? The monthly cost value reconciliation, why it measures margin rather than cash, and where the money it cannot see goes

Published 28 September 2026 · Updated 10 October 2026 · VariationFlow

A plain-English guide to the cost value reconciliation for subcontractors: what a CVR is, the value side (certified, applied, work in progress, adjustments), the cost side (cost to date by head, accruals, provisions), how margin and the out-turn forecast fall out of it, why a cash-positive job can be losing money, the monthly discipline, and the one leak a CVR cannot show you.

A package priced at twelve percent came in at three. Ask the office where the nine points went and nobody can say, because for nine months the only numbers anyone looked at were the applications and the bank. Both looked fine. The one report that would have shown the margin leaking, month by month, from the third month onwards, was never run.

That report is the cost value reconciliation, and every main contractor’s commercial team runs one on your package whether you do or not.

What a CVR is

A cost value reconciliation is the monthly commercial report, prepared per contract, that sets the value of the work done to date against the cost of doing it, and so states the margin the job has actually earned so far and the margin it is heading for. It is not the cash position and it is not the application. It is the answer to the question a set of management accounts cannot answer for a single job: are we making what we priced?

The value side

Value is what the work done is worth under the contract, whether or not anyone has paid for it yet.

• Certified to date: the gross value the payer has certified, from the payment notices.
• Applied to date: the gross value you have applied for, from the applications. The difference between the two is under-certification, and it is derived, not typed: work you have applied for and not been paid for is value, and the gap is a number worth watching on its own.
• Work in progress: value done but not yet applied for or certified. Work in the next application, measured work not yet in a valuation, and unagreed variations carried at the value you can substantiate.
• Value adjustments: the prudence line. A disputed variation carried below its claimed value, or income legitimately earned that sits nowhere else yet. Negative more often than positive.

The cost side

Cost is what the work has cost, whether or not the invoice has arrived.

• Cost to date by head: labour, plant, materials, subcontractors, preliminaries and the rest, from the ledger.
• Accruals: cost incurred and not yet in the ledger. Goods received and not invoiced, hire that has run and not been billed, sub-subcontractors’ work done and not yet certified.
• Provisions: a prudent allowance for cost and liabilities not yet incurred. A contra-charge you are disputing, defects you will have to make good, delay damages you are exposed to.

What falls out of it

Margin is total value less total cost, and the margin percentage is that figure against the total value. Beside it sits the out-turn forecast: the final value you expect the contract to settle at against the final cost you expect to incur, which gives the margin the job is heading for and doubles as the budget the earned margin is measured against. The movement between the two, in percentage points and in pounds, is the number a commercial manager reads first, because a job whose earned margin is drifting below its forecast margin is a job with a problem that has not yet been named.

Why it is not the cash

A job can be cash-positive and losing money: a front-loaded application profile, a deposit, or a payer who happens to pay quickly can put you ahead at the bank on a package whose cost is running past its value. A job can be cash-negative and perfectly healthy, if the payer is slow and the retention is high. Cash tells you whether you can make payroll. The CVR tells you whether the job is worth doing. They are different questions and a firm that only asks the first finds out the answer to the second at the final account.

Where the leaks show

Run monthly, a CVR is where the five ways a margin leaks show up while there is still something to be done about them. A variation done and not yet applied for appears as work in progress with no application behind it, and stays there until somebody asks why. Daywork sheets that went in unsigned appear as value adjustments, carried below their face value. A contra-charge appears as a provision the month it is threatened, not the month it is deducted. Under-certification grows on a job where the notices are not being counted. And the forecast final cost moves before the forecast final value does on a job that is being delayed and not notified.

The one leak it cannot see

A CVR reports what has been recorded. The variation done on a verbal instruction that nobody wrote down is not work in progress, because nobody knows it is there; it is cost with no value against it, and it shows up only as a margin percentage that is slightly lower than it should be, for no reason anyone can name. That is the signature of the unrecorded variation: not a line, but a drift. A CVR that drifts down by a point a month with nothing to explain it is not a report of an accounting problem. It is a report that the site is doing work the office does not know about.

The discipline

• Monthly, on the same day, before the application goes in rather than after, so that the application is built from the value the CVR says exists.
• The site and the commercial side agree the work in progress together. A CVR the site has not seen is a spreadsheet.
• Every provision is reviewed every month and released the month the risk goes, because a provision that is never released is a margin that is never earned.
• The forecast is updated when something changes, not at the year end. A forecast that never moves is a budget, and a budget is not a forecast.

How VariationFlow runs it

VariationFlow’s CVR pulls certified and applied value from the project’s valuation account, so under-certification is derived rather than re-keyed, takes work in progress and value adjustments as monthly entries, carries cost to date and accruals by head and provisions as a line of their own, and reports margin, margin percentage, the out-turn forecast and the movement against it. The variation register beneath it is what turns an unrecorded extra into a recorded one, which is the only thing that ever closes the leak the CVR cannot see.

This guide is general information about commercial practice rather than accounting or legal advice. How a firm recognises revenue in its statutory accounts is a separate question for its accountants; the CVR is a management report, and its job is to tell you the truth about a contract a month at a time.