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INTRODUCTION

Interim claims in construction contracts are periodic applications for payment that value work completed to date, usually by reference to the priced bill of quantities and contract preliminaries (RICS, 2015).
The Housing Grants, Construction and Regeneration Act 1996 mandates interim payments for contracts longer than 45 days to ensure cash flow.
These are often submitted monthly by the contractor as an "Interim Application for Payment" and are based on the value of the work completed since the last payment.
This system helps both contractors and clients manage cash flow throughout the project lifecycle.
The quantity surveyor’s task is to assess value, not cost, by re‑valuing the whole of the work at each valuation date and applying the contract’s payment provisions (RICS, 2015).

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ANALYSIS OF INTERIM CLAIMS

Preliminaries in the bill of quantities cover project‑wide costs such as site establishment, management, temporary works, insurances, scaffolding and general attendances (RICS, 2021).
Pricing the preliminaries in a project is one of the most difficult sections of the bill of quantities (Pearson, 2017).
In interim claims, preliminaries are usually valued on a time‑related or percentage‑of‑completion basis, aligned to actual project progress and original pricing assumptions (Mursell, 2019).
The valuer should consider whether any preliminary items should be adjusted due to changes in duration, scope or phasing, in accordance with the contract and NRM guidance (RICS, 2015).

Preliminary Items

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ANALYSIS OF INTERIM CLAIMS

Measured work is typically grouped by trade or element (for example, substructure, superstructure, finishes, mechanical and electrical) following the new rules of measurement (NRM 2) or similar structured rules; CESMM4 (RICS, 2012).
For each trade or element, the interim valuation multiplies the quantity of work actually executed by the corresponding bill rate, taking account of measured variations where agreed (Mursell, 2019).
Visual inspection on site, supported by up‑to‑date records and drawings, is essential to confirm the extent and stage of completion claimed for each trade or element (RICS, 2015).

Measured work by trade or element breakdown

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ANALYSIS OF INTERIM CLAIMS

A nominated subcontractor is one selected by the client to be used by the main contractor as part of the contract (Pearson, 2017).
Nominated sub‑contract values in interim claims represent the measured and agreed value of work executed by nominated sub‑contractors, often supported by their own applications and certificates (SC Quantity Surveyors, 2017).
Under typical UK standard forms, nominated sub‑contract accounts are incorporated into the main contractor’s interim valuation once the relevant work is completed on site or materials have been supplied in accordance with the sub‑contract (SC Quantity Surveyors, 2017).
The quantity surveyor should check that nominated sub‑contract values align with the main contract allocation of prime cost or provisional sums, and that any adjustments for variations, omissions or re‑measurement are properly documented (RICS, 2017).
Interim assessment of nominated sub‑contract values should reflect only work actually executed and reasonably fixed, with any retention, discounts or contra‑charges clearly identified in the valuation build‑up (RICS, 2015).

Nominated subcontract values

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ANALYSIS OF INTERIM CLAIMS

Materials on site in interim claims are unfixed materials that have been delivered to the project, are clearly identified for the works and are suitably stored and protected (Proventus, 2024).
Including materials on site within interim valuations improves contractor cash flow by recognising expenditure incurred before incorporation into the permanent works (Proventus, 2024).
The quantity surveyor should verify quantities, invoices, delivery notes and condition of materials on site, and ensure that contract conditions regarding title, storage, security and any exclusion of high‑risk items are satisfied (RICS, 2015).
Some contracts also permit inclusion of materials off site, subject to additional safeguards such as vesting certificates, appropriate storage arrangements and clear identification, which must be rigorously checked before valuation (Proventus, 2024).

Materials on site

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SELF-ASSESSMENT TASK

SCENARIO

Project team can apply each of these cost elements to budget and control expenditure: preliminary items, measured work by trade, nominated subcontract values, and materials on site.

TASK: For each element,

Explain briefly its role in cost planning (for example, preliminaries for site setup; measured work for trade‑specific quantities, etc.).

Identify how combining these elements helps avoid cost overruns and ensures project stays within budget.

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Cost

Value

Comparisons

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COST VALUE COMPARISONS

COST FROM MANAGEMENT INFORMATION SYSTEMS (MIS)

Management information systems (MIS) in construction gather cost data from sources such as purchase orders, invoices, labour records and sub‑contract accounts into a central database or cost ledger (Autodesk, 2025).
These systems support real‑time monitoring of budget versus actual expenditure at project, trade and activity level, forming a key input to cost value reconciliations (CVR) and wider cost control processes (Procore, 2025).
Cost reports generated by MIS should clearly separate committed costs, actual costs to date and forecast final costs, enabling comparison with earned value and contract sum (Causeway, 2024).

A comparison of the monthly valuations carried out and paid through interim certificates against the value of the work completed.
Monthly valuations represent the “value” side of the cost–value comparison, capturing the certified value of work done, variations and materials on or off site at each valuation date (Procore, 2025).

MONTHLY VALUATIONS RECONCILED WITH PROJECT COSTS

Autodesk Build [YouTube]: Cost Management in Construction

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COST VALUE COMPARISONS

Cash flow forecasting focuses on the timing of cash receipts and payments rather than overall profit, showing when money is expected to come in from interim payments and when it must go out to suppliers, labour, plant and tax (Procore, 2025; Wellers, 2025).
A typical construction cash flow forecast sets a time period (often monthly), identifies expected inflows (valuations, retention release, loans) and outflows (construction costs, preliminaries, finance charges, VAT), then calculates net cash flow and cumulative cash position for each period (Procore, 2025)

CASH FLOW FORECASTING

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COST VALUE COMPARISONS

PROFIT AND LOSS PROJECTIONS

They also estimate the contractor’s outgoings, separating variable costs (for example, materials and subcontractors) from fixed costs (for example, staff wages, insurance and office overheads).
By comparing expected income with these projected costs, the contractor can judge how much work is required and what prices need to be charged in order to achieve a profit.
A profit occurs where projected income is higher than total projected expenditure; if projected costs are higher than income, the business is forecast to make a loss and will need to review pricing, workload or overheads.

Profit and loss projections estimate the income a contractor expects to receive for construction work or services over a defined period or for a specific project.

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EXAMPLE – PROFIT & LOSS

SCENARIO

For a domestic single‑storey extension project, you are given summary financial data for two work packages: (1) groundworks and (2) roof construction.

TASK

Using the monthly construction profit and loss template provided,

Enter the revenue and associated job costs for each package in the appropriate month,
Then calculate the gross profit for each activity.

Given data:

Contract value for groundworks (January billing): £18,000
Job costs (January):

Labour: £6,000
Materials (hardcore, concrete, drainage pipework): £4,500
Plant hire (mini‑excavator, dumper, vibrating plate): £2,000
Subcontractors (ground investigation, waste removal): £1,500
Permits, inspections and tipping fees: £500

Given data:

Contract value for roof construction (March billing): £22,000
Job costs (March):

Labour (carpenters, roofers): £7,500
Materials (trusses, tiles/slates, felt, battens, fixings): £6,800
Access equipment hire (tower scaffold/edge protection): £1,200
Subcontracted specialist (rooflight installation): £1,000
Other costs (waste skips, small tools, delivery charges): £500

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SOLUTION – PROFIT & LOSS

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SELF-ASSESSMENT TASK (PART A) – PROFIT & LOSS

Project Overview

You are the quantity surveyor for a small construction firm undertaking a single-storey rear extension to a semi-detached house in Cardiff, UK. The total contract value is £120,000, with the project spanning 4 months (January to April). The extension includes groundworks and foundations, external walls, roof construction, mechanical and electrical (M&E) installations, internal finishes, and external works (such as paving and drainage). The firm has allocated overheads and other expenses across the project based on historical data.

Task for Students

Using the provided profit and loss spreadsheet (focus on the Monthly Profit & Loss sheet for January to April), complete the profit and loss statement for the entire project. Enter the revenue (from billing milestones) and job costs for each building element as a separate "Job" (e.g., Job 1 = Groundworks, Job 2 = Walls, etc.). Allocate overhead expenses proportionally across the months (total overheads £8,000; assume even distribution of £2,000 per month). Calculate gross profit, total expenses (including overheads), and net profit/loss for the project.

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SELF-ASSESSMENT (PART B) – PROFIT & LOSS

Revenue (Total Contract Value Breakdown by Element – Billed Monthly):

Groundworks/Foundation (Job 1, January billing): £25,000
External Walls (Job 2, February billing): £30,000
Roof Construction (Job 3, February billing): £20,000
M&E Installations (Job 4, March billing): £15,000
Internal Finishes (Job 5, March billing): £18,000
External Works (Job 6, April billing): £12,000

Job Costs by Element (Direct costs; allocate to the relevant month's "JOB COSTS" rows):

Groundworks/Foundation: Labour £8,000; Materials (concrete, reinforcement, excavation) £7,500; Equipment Rentals (excavators) £3,000; Subcontractors (drainage) £2,500; Permits/Dump Fees £1,000; Other £500
External Walls: Labour £9,000; Materials (bricks, blocks, mortar) £10,000; Equipment Rentals (scaffolding) £2,000; Subcontractors (none) £0; Permits/Dump Fees £0; Other (tools) £500
Roof Construction: Labour £6,000; Materials (tiles, trusses, felt) £7,000; Equipment Rentals (cranes/lifts) £2,500; Subcontractors (rooflights) £1,000; Permits/Dump Fees £0; Other £500
M&E Installations: Labour £4,500; Materials (wiring, pipes, fixtures) £5,000; Equipment Rentals (none) £0; Subcontractors (electrician/plumber) £3,000; Permits/Dump Fees £500; Other £1,000
Internal Finishes: Labour £7,000; Materials (plaster, paint, flooring) £6,000; Equipment Rentals (none) £0; Subcontractors (tiling) £2,000; Permits/Dump Fees £0; Other £1,000
External Works: Labour £3,500; Materials (paving, turf, drainage) £4,000; Equipment Rentals (compactors) £1,000; Subcontractors (landscaping) £1,500; Permits/Dump Fees £500; Other £500

Overhead Expenses (Allocate £2,000 total per month across categories like Salaries £800, Insurance £400, Vehicle Costs £300, Office Supplies £200, Utilities £200, Other £100):

Total for project (January-April): £8,000

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4PS (2024) Understanding cost value reconciliation in construction.. Available at: https://www.4ps.co.uk (Accessed: 30 November 2025).
Archdesk (2025) Your guide to construction work‑in‑progress reporting. Available at: https://archdesk.com (Accessed: 30 November 2025).
Autodesk (2025) Construction cost management. Autodesk Construction Cloud. Available at: https://construction.autodesk.co.uk (Accessed: 30 November 2025).
Causeway (2024) Guide to cost value reconciliation (CVR) in construction. Causeway. Available at: https://www.causeway.com (Accessed: 30 November 2025).
Construction Management (2025) Cashflow in construction – foresight v forecasting. Available at: https://constructionmanagement.co.uk (Accessed: 30 November 2025).
JCT (2017) Guidance notes: Measurement and valuation of works. London: Joint Contracts Tribunal.
Metroun (2025) How to ace your CVR as a quantity surveyor. Available at: https://www.linkedin.com (Accessed: 30 November 2025).
Mindspace Outsourcing (2025) Construction accounting UK guide 2025. Available at: https://mindspaceoutsourcing.co.uk (Accessed: 30 November 2025).
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Procore (2025) How cost value reconciliation drives project success. Available at: https://www.procore.com (Accessed: 30 November 2025).
Quantity Surveying Hub (2023) Key elements of quantity surveying in interim valuations. Available at: https://quantitysurveyinghub.com (Accessed: 30 November 2025).
RIB Software (2024) Understanding the cost value reconciliation process. Available at: https://www.rib-software.com (Accessed: 30 November 2025).
RICS (2015) Interim valuations and payment. London: RICS.
RICS (2017) Valuations. isurv. London: RICS. Available at: https://www.isurv.com (Accessed: 30 November 2025).
SC Quantity Surveyors (2017) Valuations for contractors. Available at: https://www.scquantitysurveyors.com (Accessed: 30 November 2025).
Wellers (2025) The importance of a cash flow forecast and profit projections. Available at: https://www.wellersaccountants.co.uk (Accessed: 30 November 2025).

References/Bibliography