Demo Meridian EPC: construction project control day

Demo Meridian EPC LLC is building a logistics park in Abu Dhabi under a 24-month fixed-price contract worth AED 86,000,000. The client pays monthly against certified progress, retains 10%, and pays approved variations separately. Meridian buys structural steel in USD, uses subcontractors from three countries, and operates site stores at SITE-ABU-01. OSERP must connect contract, WBS, commitments, receipts, labour, plant, progress, billing, cash, and margin forecasting.

1. Create the project and WBS

Open Projects → Project → New. The header records legal company, client, contract number, contract currency, start/end dates, project manager, branch, tax treatment, billing method, retention percentage, and approval status. The WBS separates scope and responsibility:

WBS	Budget AED	Cost owner	Billing rule
1. Preliminaries	6,000,000	Site management	Milestone
2. Earthworks	12,000,000	Civil team	Measured quantity
3. Structure	28,000,000	Structures team	Progress percentage
4. MEP	24,000,000	MEP team	Progress percentage
5. External works	10,000,000	Infrastructure team	Measured quantity
6. Contingency	6,000,000	Commercial manager	Controlled drawdown

Each WBS node should have cost code, revenue code, budget version, manager, start/end, tax dimension, and permitted procurement categories. A cost code without a WBS assignment should be rejected or routed to suspense for review. The approved baseline is version 1; later forecasts cannot overwrite it.

2. Set up commitments and subcontractors

Create suppliers for steel, concrete, MEP, scaffolding, and labour. The subcontract agreement records scope, currency, insurance, retention, advance, performance bond, payment term, tax, rate schedule, and expiry. For the MEP subcontractor, enter contract value AED 18,000,000, 5% retention, 10% advance recoverable over progress, and a 30-day certification cycle.

When procurement creates a purchase request, require project, WBS, cost code, required date, specification, quantity, estimated price, and budget check. A purchase order reserves commitment. The commitment report shows approved budget, committed PO, received cost, invoiced cost, actual cost, and remaining forecast. Finance should see exposure before the invoice arrives.

3. Import steel with landed cost

Meridian orders 200 tonnes of structural steel at USD 1,050 per tonne. The PO header includes supplier, project, WBS, currency, exchange rate, incoterm, delivery site, buyer, and approval. Lines include grade, quantity, UoM, heat number requirement, promised date, price, tax, and cost code.

At receipt, site stores records quantity, heat number, mill certificate, delivery note, inspection result, unloading date, and bin. Freight and duty are entered as landed-cost components and allocated by weight. A damaged 5-tonne shortage becomes a discrepancy and supplier claim. The receipt posts inventory or site material and GRNI; the supplier invoice clears GRNI and records the final cost to the project dimension.

4. Manage site inventory and plant

Site inventory must distinguish available, reserved, issued, returned, damaged, and subcontractor-held material. An issue to WBS 3. Structure records item, quantity, batch or heat number, storekeeper, crew, date, and work package. A return reverses the original WBS consumption. A transfer between site and central warehouse remains traceable to both warehouses.

Plant records include excavator, crane, generator, ownership, meter, rate, operator, service date, and project assignment. Daily plant sheets capture hours, idle time, fuel, operator, location, and work order. A crane allocated 80 hours but used 62 should forecast the unused commitment and explain the variance.

5. Record daily progress and labour

The site engineer creates a daily report with weather, workforce, equipment, work fronts, quantities installed, safety incidents, inspections, photographs, and constraints. Progress lines include WBS, activity, planned quantity, installed quantity, unit, evidence, and approval. A 12% structure completion is not billable until the client representative certifies the period.

Labour entries record employee or subcontract crew, date, hours, overtime, activity, WBS, cost rate, and supervisor approval. Payroll may be processed centrally, but the project receives the approved labour cost. Missing WBS entries go to an exception queue instead of distorting a general overhead account.

6. Monthly valuation and progress billing

At month end, the quantity surveyor prepares an application for payment. Header fields include client, project, period, certificate number, currency, tax date, retention, advance recovery, previous certified value, current value, and approval. Detail includes WBS, contract quantity, cumulative quantity, current quantity, rate, gross value, variation reference, and evidence.

Suppose cumulative certified work is AED 8,600,000 and prior certificates total AED 6,900,000. Current gross progress is AED 1,700,000. Retention at 10% is AED 170,000 and advance recovery is AED 85,000. The net before tax is AED 1,445,000. OSERP should show the formula and source quantities, then create the invoice with revenue, receivable, retention receivable, and tax mappings according to policy.

Retention is not a discount. Track it as a separate receivable with expected release date and certificate reference. When the client releases AED 860,000 after practical completion, allocate it to the retention schedule and not to a new sales invoice.

7. Variations, claims, and approvals

The client requests an additional loading dock. Create a variation with originator, instruction date, scope, estimated cost, estimated revenue, schedule impact, drawings, and approval status. A variation cannot increase the billing application until commercially approved. The commercial manager compares original budget, approved variation, committed cost, actual cost, and expected margin.

For a disputed delay claim, record notice date, event, contractual clause, impacted activities, days claimed, cost exposure, correspondence, and status. Keep the claim separate from the base contract and link any settlement or credit. This creates an audit trail for why revenue or forecast changed.

8. Multi-currency supplier settlement

The steel supplier invoice is USD 210,000 while the project ledger is AED. Store invoice rate, tax, bank reference, and settlement currency. At payment, OSERP posts realised FX variance to the mapped gain/loss account and keeps the project cost at the approved functional-currency value. Month-end revaluation covers the open USD payable. A user must not change the original PO rate simply to make the payment agree.

9. Forecast, close, and handover

The project manager reviews earned value, cost variance, schedule variance, committed cost, estimate to complete, estimate at completion, and margin. If the structure budget is AED 28,000,000, actual cost AED 11,200,000, and estimate to complete AED 18,900,000, the forecast is AED 30,100,000—an AED 2,100,000 adverse variance requiring a documented action plan.

Close gates include final quantities, subcontractor accounts, retention, warranties, defects, site inventory count, plant return, tax reconciliation, client certificate, bank receipts, and WBS-to-GL tie-out. Capitalisable construction costs must be transferred to the asset register only after authorised practical completion. Archive drawings and certificates with retention and access rules.

KPI	Baseline	After OSERP discipline	Improvement
Cost report preparation	5 days	6 hours	95% faster
Unapproved commitments	AED 3.4m	AED 0.3m	91% lower
Certificate-to-invoice delay	12 days	2 days	83% faster
Material variance discovered at close	4.8%	1.1%	77% lower
Retention ledger exceptions	37 / quarter	3	92% lower
Forecast margin refresh	Monthly	Weekly	4× more frequent

Practice challenge

Create a project with six WBS nodes, raise a steel PO in USD, receive a partial quantity with a shortage, issue material to structure, record labour and daily progress, create a certified application with retention and advance recovery, approve a variation, settle the supplier, and run an estimate-at-completion report. Explain every field, approval, budget impact, journal, currency effect, and close gate.

Related: Projects workflow, Procure to pay, Warehouse replenishment, Advanced GL Mapping, and API library.