Episode 00168 – LinkedIn Content
Cost to Complete: The Job Costing Report Every Contractor Needs

LINKEDIN POST (Short Form)

Construction companies do not fail because they lack revenue.

They fail because they believe inaccurate profitability reports.

A 1-3% error in percentage-of-completion can completely change reported profits.

I have seen contractors with impressive financial statements eventually discover a negative net worth because estimates hid losses for years.

The solution is not more bookkeeping.

It is better communication between accounting, project management, and the field.

Your WIP schedule should help you identify problems early, not hide them until closeout.

If your financial statements do not match what you are seeing on your jobsites, it is time to ask why.

Book a strategy call: https://accountingsolutionsllp.com/appointment/

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LINKEDIN LONG-FORM ARTICLE

Your Construction Company May Be Showing Profits That Do Not Actually Exist

One of the biggest misconceptions in construction is believing that financial statements always reflect reality.

In most industries, accounting is largely based on completed transactions. Construction is different. Because projects often span multiple months or even years, companies rely on estimates to recognize revenue and profit before work is complete.

That creates opportunity, but it also creates risk.

One of the most important estimates in construction accounting is Estimated Cost to Complete. This single figure influences reported revenue, gross profit, work in progress, and ultimately the financial health presented to owners and lenders.

The challenge is simple: no outside accountant truly knows what it will cost to finish your project. That estimate comes from inside your organization, from project managers, estimators, and operations leaders.

If communication between the field and accounting breaks down, your financial statements can quickly become misleading.

I recently came across a case study of a contractor that grew to approximately $70 million in annual revenue over nine years. On paper, the company appeared profitable.

In reality, more than 65% of its completed projects had lost money.

Those losses remained hidden because estimated profits from ongoing projects offset actual losses from completed work.

Management did not recognize the problem until cash disappeared.

The lesson is clear.

Financial statements should never be accepted without understanding the assumptions behind them.

Construction leaders should review Work in Progress schedules monthly, challenge estimates, compare projected costs against actual performance, and encourage constant communication between accounting and operations.

Your numbers should support better decisions, not provide false confidence.

Because in construction, profitability is not determined when financial statements are printed.

It is determined by the quality of the information behind them.

If you are unsure whether your current reporting accurately reflects job profitability, now is the time to review your systems, not after the project is complete.

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PHOTOROOM LOW POLY 3D IMAGE PROMPTS (4 options)

Option 1: A construction project manager reviewing a work in progress report on a laptop at a job trailer desk with blueprints and hard hats visible, faceted crystalline polygons, clean professional low poly 3D style, blue and gray accents.

Option 2: A contractor standing in front of a rising building looking at declining financial charts on a tablet, faceted crystalline polygons, clean professional low poly 3D style, warm orange and charcoal tones.

Option 3: A CPA and a contractor sitting across from each other at a table reviewing financial statements and job cost reports, faceted crystalline polygons, clean professional low poly 3D style, cool blue and green accents.

Option 4: A work in progress schedule spreadsheet on a desk with construction site visible through a window in the background, faceted crystalline polygons, clean professional low poly 3D style, neutral gray and amber lighting.

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.