25 August 2026 · TechSlideITS
Why project profitability is known too late
Most contractors find out whether a job made money after it is finished. By then the only thing left to do is regret it.
Most contractors can tell you precisely what a completed project earned. Rather fewer can tell you what the one running right now is earning.
That is the whole problem. Profitability known at completion is a historical fact. Known monthly, it is something you can still act on.
Why the number arrives late
Costs land after the work
Subcontractor bills, material invoices and equipment charges arrive on their own schedule, often weeks after the work they relate to. A month's cost figure is therefore incomplete by construction, not by carelessness.
The answer is accrual: booking an estimated cost for work done but not yet billed. Contractors resist this because it feels like guessing. It is an estimate, and an estimated cost recorded in the right month produces a far more useful figure than an accurate cost recorded in the wrong one.
Revenue is recognised at certification
Work done in one month may be certified in the next. So costs land in one period and the matching revenue in another, and comparing them month by month produces noise that looks like performance.
Comparing cost of work done against value of work done — regardless of when either was billed — removes this. It requires measuring work done, which sites do anyway for billing.
Overheads sit in a pool
Site establishment, supervision, plant on hire, temporary works. Real costs, not attributable to a single BOQ item, and frequently left unallocated until the end.
A simple allocation basis, applied consistently and imperfectly, is far more useful than a perfect one applied at completion.
The number that matters most
Not cost to date. Cost to complete.
Cost to date tells you what has happened. Cost to complete — the estimated remaining cost against the remaining certifiable value — tells you where the project is heading, which is the only version you can still change.
It requires judgement, and it will be wrong. Being roughly right about the direction, monthly, beats being precisely right about the past.
What a monthly review needs
- Work done in the period, measured, whether or not certified
- Costs booked to the project, including accruals for uninvoiced work
- Overheads allocated on a consistent basis
- Revised estimate of cost to complete
- Comparison against the original estimate, by BOQ group
That last comparison is where the value sits. A project overall might look acceptable while one work group is losing badly and being carried by another — and the losing group is often still being extended.
What contractors find when they start
Two things, consistently.
First, some items were priced below cost at tender and nobody noticed, because the tender was won and the job started. Second, variations are frequently the most profitable work on a project, and the least deliberately pursued.
Neither is discoverable at completion, when both are academic.
Where to start
Do it for one project first, monthly, roughly. Do not build a system for the whole business before knowing what the numbers tell you.
One project reviewed monthly for a quarter will show whether the discipline is worth extending — and will usually make the argument itself.
If you want to see project costing against BOQ groups, see our construction ERP or book a demo.
Frequently asked questions
Because costs land after the work they relate to, revenue is recognised at certification rather than when work is done, and overheads sit unallocated until completion. Each is a timing problem rather than a data problem, and each has a practical fix.
Cost to complete is the estimated remaining cost against the remaining certifiable value. Cost to date tells you what has already happened; cost to complete tells you where the project is heading, which is the only version you can still change. It requires judgement and being roughly right monthly beats being precisely right afterwards.
Yes. Subcontractor and material bills arrive weeks after the work, so a month's cost figure is incomplete by construction. An estimated cost recorded in the right month is far more useful than an accurate cost recorded in the wrong one, even though accruals feel like guessing.
On a simple, consistent basis applied every month — site establishment, supervision, plant on hire and temporary works are real costs that are not attributable to a single BOQ item. An imperfect allocation applied monthly is more useful than a perfect one applied at completion.
That some items were priced below cost at tender and nobody noticed because the job was won and started, and that variations are often the most profitable work on the project and the least deliberately pursued. Neither is discoverable at completion, when both are academic.