Tracking Job Profitability While the Job Is Still Running

Most contractors find out whether a job made money when the last invoice clears. By then the decisions that determined the answer — the crew you put on it, the change order you never papered, the material buy you made in week three — are months behind you.

The fix is not more software. It is tracking three numbers that look forward instead of backward, on the jobs where the margin is thin enough to matter.

Costs to Date Is a Rear-View Mirror

The report most contractors run mid-job is costs incurred so far against the estimate. It feels like tracking. It is not, because it answers a question about the past.

The forward-looking version is cost-to-complete:

• Projected final cost = costs to date + your current estimate of what remains
• Projected profit = contract value (including approved change orders) − projected final cost

That second line is the only number on a job report that can still be acted on. Re-estimate the remaining work honestly each time you update it — the common failure is leaving the original estimate of the remainder untouched, which quietly assumes every problem you have already hit will not happen again.

Committed Costs Are the Reason "Actual" Understates

Costs to date usually means invoices received. But a signed subcontract or an issued purchase order is money already spent — it simply has not arrived in the mail yet.

On a job with a large sub package, the gap between invoiced and committed can be most of the remaining budget. Track committed costs alongside actual ones, or your mid-job report will look healthy right up until the invoices land.

Percent Spent Is Not Percent Complete

These are two different measurements and the distance between them is the earliest warning you get.

• Percent spent = costs to date ÷ total estimated cost. It comes out of the books.
• Percent complete = how much of the physical work is actually done. It comes from the field.

If you are 40% complete and 65% spent, the gap is the signal. What it does not tell you is the size of the problem — for that, go back and rebuild cost-to-complete from the field's read of what is left. Sometimes the answer is a front-loaded material buy and the job is fine. Sometimes it is a productivity rate you will now carry across the remaining 60%.

One discipline makes this measurement trustworthy: whoever gives you percent complete should not be the person whose performance the number reflects.

Unapproved Change Orders Belong in This Calculation

Work performed under a change order that has not been approved sits in the worst possible place — the cost is in your actuals, the revenue is in nobody's contract value. A job can read as a margin collapse when it is really an unsigned piece of paper.

Track unapproved change orders as a separate line so you can see the job both ways: as it stands contractually, and as it stands if the change orders land.

Your Accounting Method Decides Whether Any of This Works

In-progress job costing assumes your books recognize revenue and cost as the work happens. On a pure cash basis they do not — income appears when the customer pays and costs appear when you pay them, so a job's profitability moves with your collection timing rather than with the work.

That is a real constraint, not a technicality. If you want job-level numbers you can act on mid-job, the underlying method has to support it. Our guide to cash vs. accrual accounting for contractors covers the trade-offs and the thresholds that eventually force the decision.

A distinction worth keeping straight: percent complete as a management metric is not the same thing as the percentage-of-completion tax method. Under IRC §460, long-term contracts — those not finished in the tax year they start — are generally taxed on percentage-of-completion. The exception for construction contracts under §460(e)(1)(B) has two conditions that both have to hold: at signing you estimate the contract will be completed within 2 years of commencement, and you meet the gross receipts test of §448(c) — average annual gross receipts over the prior three years not exceeding $32,000,000 for tax years beginning in 2026 (Rev. Proc. 2025-32, §3.30).

You can run percent-complete internally on every job regardless. How the same job is reported for tax is a separate question, and one worth asking before it is filed rather than after.

Over- and Under-Billing Tell You a Different Story

A job has a profit story and a cash story, and they are not the same story.

• Underbilled — costs and earned profit exceed what you have billed. The work is done; the invoice is not out. You are financing your customer's project.
• Overbilled — billings exceed costs and earned profit. Cash looks strong, but part of that balance is work you still owe.

The second one is where contractors get hurt, because an overbilled job funds the business until it doesn't. A portfolio of overbilled jobs can look like a healthy bank balance and be a backlog of unfunded labor. Reviewing this alongside a cash flow forecast is what turns it into an actual decision, and retainage and progress payment timing is what determines when the cash finally shows up.

What to Track on Every Active Job

Keep it to what changes a decision:

• Contract value, with approved and unapproved change orders separated
• Costs to date, split labor / material / subcontractor
• Committed but not yet invoiced costs
• Estimated cost to complete, re-estimated rather than inherited
• Percent complete from the field
• Projected final profit, and how it moved since last time

That last item matters more than its absolute value. A job projecting 12% margin is information; a job that projected 18% a month ago and projects 12% now is a trend, and trends are what you can still get in front of.

Cost coding is the dependency underneath all of it. If labor hours and supplier invoices are not assigned to the right job as they occur, none of these numbers exist — fix that before buying anything.

Focus Where the Margin Is Thin

You do not need this level of detail on every job. Put it on the ones that are large, long, or bid tight, and review the rest in summary. A contractor tracking six jobs properly is in better shape than one tracking thirty badly.

And do not wait for complete information. A cost-to-complete built on the field's best current read, updated on a fixed day, beats a precise number that arrives after the job closes.

How KDM Accounting Services Can Help

At KDM Accounting Services, we help Florida contractors build job-level reporting they will actually keep current. We can:

• Set up job costing inside your bookkeeping so costs land on the right job as they occur
• Build a cost-to-complete and over/under-billing view from the books you already keep
• Sort out whether your current accounting method supports in-progress job reporting
• Connect job-level projections to cash flow planning and tax timing
• Prepare the work-in-progress reporting banks and bonding companies ask for

The goal is visibility while there is still time to use it.

Start With the Jobs That Can Hurt You

Pick your three largest active jobs. For each one, write down the contract value, costs to date, committed costs, and the field's estimate of what is left. Subtract. That is your projected profit, and for most contractors it is a number they have never seen before the job ended.

If you would like help building this into your books, contact KDM Accounting Services. We will set up job reporting that shows you problems while they are still fixable.