Cash Flow for Asset Owners: Phase at the Cost Code Level

If you are an asset owner – a client organisation managing its own capital projects – the rule for cash flow is simple: phase at the cost code level, and never phase at the forecast-to-complete (FTC) line level.

Why the cost code?

For an asset owner, the cost code is the stable unit of control. Budgets, transfers, approvals, reporting and funding all roll up by cost code, and the code exists for the whole life of the project. Phasing at this level means:

• The cash flow always reconciles to the forecast for that code.

• Phasing survives as the forecast moves from untendered estimates to awarded contracts.

• Portfolio and funding reports roll up consistently across projects.

In the Costs module, open Phasing and set Depth to Chart of Accounts. Each code shows its remaining value, actuals, total, budget and a phasing method.

Scroll right to see the timephased months. In the example below, the consultant codes are spread using the Monthly method and Main works follows a benchmark profile. Note the FTC lines under 100.1 (Site fences, Original Budget): they carry no phasing, so their value sits in the Variance column.

Why never at the FTC line?

FTC lines are the untendered part of the forecast – the estimates sitting in Forecast to Complete until the work is procured.

They are temporary by design. When a package is tendered and awarded, the FTC value is replaced by a commitment. Any phasing held on the FTC line goes with it, and the cash flow has to be rebuilt. Phasing some FTC lines while also phasing the parent code also makes it very hard to see which number is driving the cash flow.

The warning sign is the Variance column in the Phasing grid: FTC lines left unphased (or phased separately from their code) show up as remaining value that is not in the cash flow.

Quick checklist

• Set Depth to Chart of Accounts before phasing.

• Choose a phasing method per code (Manual, Monthly, S-curve etc.) and set realistic start and end dates.

• Leave FTC lines unphased – let the code carry the cash flow.

• Check that Variance is zero (or explained) at every month end.

Clients can choose a different approach, but if they do they accept the extra work and the reconciliation issues that come with it.