All cost control in a project is broken down by either account or production code. This is the foundation everything else rests on: every cost object — Subcontractor change orders, Back charges, contracts, purchases and so on — is assigned to an account or production code.
Account or production code
Account: you track costs in line with how they are posted to ledger accounts in your accounting system.
Production code: you add one extra dimension. Posted costs still sit on ledger accounts, but are grouped under a production code. Final forecast follow-up then happens at production code level, not at pure ledger account level.
All costs on each individual production code or account are aggregated up into the project’s total final forecast.
There is also an option called “Without production code”. Any costs not linked to a specific production code are automatically placed in a fallback production code.
The final forecast is calculated in two phases
How the final forecast is calculated on a production code depends on where you are in the project.
1. Estimate
Before any purchases have been created on the production code, it is the budget — taken from the cost estimate (Estimate) for the account/production code — that makes up the final forecast.
Final forecast → Estimate → Budget (the cost estimate for the account/production code)
2. Production
The moment you link a purchase to the production code for the first time, you move from estimate mode into production mode. The foundation is no longer the budget, but the contract or purchase — together with related cost objects:
Final forecast → Production → Contract/purchase, with the following adjustments:
Subcontractor change orders
Back charges (deducted)
Index regulation (LPS)
Expected additions
Uncertainty
All of these elements are summed up and make up the final forecast for the production code once you are in the production phase.
This shift is worth understanding well. It explains why the final forecast can change when you create your first purchase on an account — the basis of the calculation has been replaced.