3 Project Financial Reports That Successful Contractors Can’t Live Without

June 24, 2021

Contractors know that budget is generally the number one concern for most of their clients. It’s vitally important to clients to control costs and know where they are with their budget at any time during the project. Contractors need to meet their budget in order to ensure profitability. Both contractors and clients need to have accurate cost information so they can make decisions that benefit themselves and the project.

There are three key reports that successful contractors relyon to show them where they are with their budget and project profitability: jobcosts vs estimates, work in progress, and project profitability report.

Job costs vs estimates

The job cost vs estimate report allows contractors to know where they are with their budget at any time on a project. It compares the costs incurred to date with the budget for the overall project, as well as specific scopes. For example, the budget for flooring may be $5000 and the costs to dateshow $4500 spent. This lets the contractor know they have $500 left in their budget for that item.

Contractors use this report to spot budget overages and make adjustments as necessary. If the flooring costs to date were $5500 instead of$4500, the contractor would know they are $500 over budget. They can use this information to find out why they are over budget and make changes. The more detailed information the report provides, the more detailed analysis a contractor can perform. Some contractors may break their reports down into categories,like labor, materials, and equipment. This allows them to drill down and discover where the budget overages are coming from.

Theo Build allows contractors to set up virtual debit cards for each job, or even each scope. By isolating costs for a project or scope toone card, and setting a budget/limit for each card, contractors can easily see where they are with their costs at any time. The online portal allows contractors to quickly see costs on all their jobs by comparing the budgets to the amounts charged to date.

Work in progress

Contractors making more than $2 million in revenue per year rely on a work in progress report to determine the amount of income they can recognize each month. Costs are compared to the budget and are used to determine the percentage complete on the project, which determines how much income the contractor can recognize. For example, if 50% of the costs have come in, the contractor can recognize 50% of the contract amount as income.

The work in progress report compares costs to the budget and billings to the contract to determine the amount of income that can be recognized. If contractors have billed more than the percentage allowed, they have overbilled and have to reduce their income for the period. If they have billed less than the percentage allowed, they can add to their income. This encourages contractors to bill based on the percentage of costs that are in.

Using the information from Theo Build’s debit card portal,contractors can quickly get the information they need on costs incurred to date for each project. The total costs are divided into the total project budget to determine the percentage complete. This percentage determines how much of the contract price can be recognized as revenue. Contractors can use this information to ensure that their billings don’t exceed the percentage complete.

Project profitability report

A project profitability report compares the costs to date with the income expected for the project. It allows contractors to review the actual profitability of a project. The report can be summarized for each project or broken down into phases or cost categories. Contractors can analyze the profitability of different phases of the project by reviewing this report.For example, a profitability report may show that the project has incurred$50,000 in costs, and the income expected is $70,000. According to the report,the project is expected to bring in $20,000 profit.

As the project progresses, expected profitability may increase or decrease depending on the costs incurred and added income from change orders. Comparing the actual profitability at the end of the project with the proposed profitability when the project began is a great analysis for contractors to help them improve their estimate accuracy.

The Theo Build debit card portal allows contractors to quickly download cost information and to compare it to potential billings one ach project. This allows contractors to know every step of the way how profitable the project will be. Using this information, they can update budgets and request change orders from clients.

Up-to-date cost data is key to profitability

Having accurate up-to-date cost information is key for contractors to track the profitability of their projects. By integrating the information from Theo Build’s portal, you can quickly see costs incurred to date on each project and compare them with budgets and anticipated billings.Staying on top of budgets and ensuring that projects meet their profitability goals are easier when cost data is readily available at the click of a button.